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Archive for the ‘Economy’ Category

LKY rates S’pore E

In Economy on 12/05/2017 at 5:22 am

No not our beloved Harry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

but Yeoh Lam Keong retired chief economist of GIC whose initials FB mangles into LKY

Actually i think the govt got an A+ till end of 1980s

After that the immigration inflow was clearly excessive

It dampened wages for the working class and created working poverty for the bottom 10%

A more calibrated immigration intake would have resulted in higher productivity and real wages and a truly first world economy

Also the population increased to 5.5mln and threatens to be well above 8 not well below 6.9 by 2050

My verdict on the 1990s and 2000s?

Grade E

(Err didn’t ask permission)

What had happened is that in the 90s S’pore became an expensive place to do biz. My then M’sian boss complained that here, landlords and employees got the better of capitalists like him. One of Yeoh’s pals, Manu Bhaskaran, wrote in BT after the regional 1998 financial crisis, that the advantages of being based here for MNCs was no longer that attractive given the costs of being based here. S’pore no longer offered value for money.

The PAP administration’s solution: repress wages by allowing FTs in by the cattle-truck load rather than restructure the economy. There wasn’t a restructuring the economy report in the 90s.

Not that these reports are worth the time and effort of cutting and pasting the previous reports

Another decade, another restructuring report?

In the 80s, one Lee Hsien Loong as trade and industry minister headed a committee to recommend changes in the economy. In the early noughties when DPM he headed another committee on the same issue.

 In 201o, one Tharman and his committee produced the 2010 Economic Strategies Committee (ESC). And now there’s the CFE. It’s a bit early, but then there wasn’t a report in the 90s: so maybe making up for lost time?

No need to steal others’ lunch, PM

In Economy, India on 03/05/2017 at 2:53 pm

After all eating other people’s lunch is unhygienic.

Juz follow Trump.

He cut back the flood of the number of Indians that Indian IT cos, abusing the US visa system, were using to prefer cheap countrymen to real American, depriving real Americans of decent jobs.

Result: Infosys, the Indian IT services company that is one of the biggest losers from changes in how the US issues work visas , plans to hire 10,000 Americans in the next two years, according to the CEO.

Here’s a really long post I lifted from FB explaining how the MIW allowed Indian Indians to screw S’poreans (It was posted in 2014) over visas for Indian FTs. It seems it was a negligent, honest mistake, not on purpose. What do u think?

For all the allegations of bias that have been made against sites like TheOnlineCitizen, there are benefits in reading these alternative sources in addition to mainstream ones. For example, you get to read things that would have otherwise “flown under the radar”. Let’s have an example.

Take this FB post here by TheOnlineCitizen:https://www.facebook.com/theonlinecitizen/posts/10152771544366383

It bring’s one’s attention to the Comprehensive Economic Cooperation Agreement (CECA) signed in August 2005 between Singapore and India, and in particular, the bit on allowing free movement of professionals.

Now, have a look at the relevant bit (Chapter 9) of the CECA here. Don’t panic, it’s just 4 pages. “Above the Peanut Gallery” posts require a little more reading than your average bad photoshop, but I’m not expecting you to read whole legal judgements (yet).
http://www.fta.gov.sg/…/india-singapore%20comprehensive%20e…
in particular

(Article 9.2, Para 2f): The definition of intra-corporate transferee, with a nifty list of 127 professionals in Annex 9A
http://www.fta.gov.sg/…/annex%209a%20-%20list%20of%20profes…

(Article 9.3, Para 3): “Neither Party shall require labour market testing, economic needs testing or other procedures of similar effects as a condition for temporary entry”. Speaks for itself.

(Article 9.5, Para 1): “…each Party *shall* grant temporary entry to an intra-corporate transferee of the other Party…” Note the word *shall*. Not *may*.

(Article 9.6, Para 1): Yep, they can bring in spouses and dependants. Again, note the *shall*. Not *may*.

Now, look at the Fair Consideration Framework right here.
http://www.mom.gov.sg/…/P…/fair-consideration-framework.aspx
Notice the bit on jobs not needing to be advertised under the Jobs Bank for Singaporeans – Note intracorporate-transferees are exempt.

What this seems to mean is… An intra-corporate transferee from India is perfectly placed under CECA to “fly under the radar” to take a job here that is:
a) Not your stereotypical “we need foreign labour” construction worker (see that list of 127 professions)
b) does *not* need to be advertised in the Jobs Bank (see Fair Consideration Framework exception for intra-corporate transferees)
c) does not require “labour market testing, economic needs testing or other procedures of similar effects as a condition for temporary entry” (see CECA Article 9.3, Para 3)
d) AND can bring over his spouse and dependents to work as managers, executives or specialists (see CECA Chapter 9, Article 9.6).

I’ll pause here to let that sink in for you. For extra fun and games, do feel free to look at the 127 jobs, and see which one is most similar to yours.

===

Now, to their credit, the Singaporean (yes, the currently PAP) govt is doing their best by stalling full implementation of the CECA. I sense that they also know an “Oh crap, why did we sign that” moment when they see one. What I’m wary of, is that the stalling may not last past the elections in 2016, when political consequences of un-stalling the CECA are no longer an immediate concern.

The piper must be paid someday. India has been repeatedly raising this issue. The mistake was made already, back in Aug 2005, by policy writers and approvers who are now most probably beyond the reach of accountability. And to our chagrin, even voting in an Opposition government can’t stop this – not without going back on our word.

We can’t stop the train, but at least we know when and how it would hit us, and we know who set the train on that track.

Now, do you see the value in reading alternative media?

Smart Nation: It’s all about Big Brudder watching us

In Economy, Infrastructure, Internet, Political governance, Public Administration on 24/04/2017 at 2:45 pm

True the BBC in  http://www.bbc.com/news/technology-39641262 can come across as constructive and nation-building as ST but three cheers to the BBC for pointing that the way the PAP administration does things is a major problem for the Smart Nation initiative:

Harminder Singh, a senior lecturer in business information systems at the Auckland University of Technology in New Zealand, says the main issue with Smart Nation is that there may be too much government control over it right now for real innovation to take place.

“Singapore’s way of doing things is that the government leads, then others follow,” he told me. “This might be a problem – it is too centralised and so it may take too long for plans to trickle down.

“And ideas from the ground may be neither visible to those on top nor acceptable to them, especially if they are related to the delivery of services that are traditionally handled by the government.”

But he’s very cock in saying

it is not clear why Singapore’s leaders are so keen to move full steam ahead with this plan.

Ah ya no need to explain. It’s all about making sure Big Brother can keep on watching S’poreans. But he’s right to say that we don’t know “how the Smart Nation project will improve salaries and jobs”

“Smart Nation is about building national technology infrastructure so that the government can offer new services, or do what they do now differently. The government may need to explain more clearly how the Smart Nation project will improve salaries and jobs in Singapore to get the project moving faster.”

 

We got so many robots meh?

In Economy on 20/04/2017 at 7:17 am

Second after Souh Korea per 10,000 manufacturing workers.  Btw, the International Federation of Robotics defines industrial robots as machines that are automatically controlled and re-programmable; single-purpose equipment does not count.

What this seems to indicate is that the manufacturing of pharma and electronic products, the leading exports, here is highly automated.

So where do the FTs fit in other than in the manual labour sector (which S’poreans shun)?

Why u think why so many PMETs are unhappy?

Why wages don’t grow in line with property prices:

Real wage growth in many rich economies has been disappointing for much of the past two decades. Low wages are enabling some reallocation of workers. An overwhelming share of the growth in employment in rich economies over the past few decades has been in services, nearly half in low-paying fields like retailing and hospitality. Employment in such areas has been able to grow, in part, because of an abundance of cheap labour.

http://www.economist.com/news/business-and-finance/21719761-probably-not-humans-have-lot-learn-equine-experience-will-robots

It’s the People, stupid

In Economy, Tourism on 18/04/2017 at 1:50 pm

There’s been a lot of BS and angst about the death of Orchard Road as an “in place”.

A lady Viv Won got it right when ashe posted this comment on Facebook

Orchard used to be the IT place for urban displays of modernity and pop culture until the suburban centers and other hubs sprang up. I think it’s the G overrating form over function, Orchard has lost its function: MBS took over high end retail; people can meet their Everyday social, biological and service needs at regional centres; good hotels are spreading out of the Orchard sphere so short term tourists aren’t trapped there; there’s much local flavour and life elsewhere, in different pockets of the city like Ann Siang Hill, Boat Quay or MBFC, Robertson Quay, etc. Orchard Rd malls are like upmarket clones of things you can find everywhere else (except Far East Shopping Centre). People can’t exert their identity in a place that imposes its own overarching identity upon everything else.

It’s the People that make a place hip, not the decor or the planned festivities or whatnot. If they had to learn something from what was Mohd Sultan Rd in the late 90s, it should be that a place gets its culture from the people who gather there, for whatever reason (refurbished go-downs make great clubs). So there’s really not much reason to go to Orchard when there are so many more interesting and authentic places to hang out with people you consider to be cool🙂 then there’s always Hong Kong.

Same too like other creative industries like finance and technology.

The PAP just doesn’t get it. Remember its attempt to make S’pore a leading stem cell research centre?

Why Budget surpluses are bad: No not Chris K but a US president

In Economy, Public Administration on 12/04/2017 at 9:28 am

Albeit one from the 19th century. He thought it unfair for the US to tax the people while keeping the surplus.

“it is indefensible extortion and a culpable betrayal of American fairness and justice” for the government to run a budget surplus, and “multiplies a brood of evil consequences.”

The Treasury was “a hoarding place for money needlessly withdrawn from trade and the people’s use thus crippling our national energies, suspending our country’s development, preventing investment in productive enterprise, threatening financial disturbance, and inviting schemes of public plunder.”

Cleveland, the first Democrat to become president since before the Civil War, was incensed that the federal government was taking in more than it spent.

It bears pausing on that notion. A Democrat in the executive mansion (it wasn’t called the White House until Teddy Roosevelt came along) considered it unfair that Uncle Sam was taxing its people and squirreling away the excess.

In fact, Cleveland felt even more strongly than that. He told the assembled representatives from the then 38 states of the Union that “it is indefensible extortion and a culpable betrayal of American fairness and justice” for the government to run a budget surplus, and “multiplies a brood of evil consequences.”

The Treasury has become “a hoarding place for money needlessly withdrawn from trade and the people’s use,” Cleveland thundered, “thus crippling our national energies, suspending our country’s development, preventing investment in productive enterprise, threatening financial disturbance, and inviting schemes of public plunder.”

http://www.reuters.com/article/us-usa-trade-breakingviews-idUSKBN17D1SU

Slow train from UK to China: See who’s running it

In Economy, Logistics, Shipping on 12/04/2017 at 4:52 am

I’m surprised the cybernuts are not saying that this shows S’pore is doomed, doomed. They most probably don’t read anything other than “The Idiots — S’pore” and TRE and ST. Even Terry’s Online Channel is too cheem even if it advocates “pak police” (OL OK “Diss police”)

The first rail freight service from the UK to China has departed on its 17-day, 7,500-mile journey.

British goods including soft drinks, vitamins and baby products are in the 30 containers carried by the train, which will be a regular service.

The DP World locomotive left its terminal in Stanford-le-Hope, Essex, for Zhejiang province, eastern China.

http://www.bbc.com/news/uk-39549077

Seriously waz interesting is that the train is run by a port co that is a global rival of PSA: DP World or Dubai World.

So what if we are tops in start-up talent?

In Economy on 31/03/2017 at 5:45 am

What has this to do with the price of eggs?


In case any TRE cybernut reading this wonders about the term, it means

When we get told “What’s that got to do with [anything, the price of eggs in China, the sun and the moon and the stars, etc]?” the speaker is saying (or telling us) thatwhatever we said beforehand was irrelevant or has no bearing to the discussion.

———————–

Great response to the constructive, nation-building media’s attempt to play up finding that S’pore is tops in world for start-up talent.

 

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Interesting Jack Ma signs this with M’sia, not S’pore

In Economy, Malaysia on 25/03/2017 at 7:00 am

A common comment on social media and blogshere when not dissing the PAP is that our SMEs serve locals. Even the PAP administration grumbles that SMEs not going abroad.

So it’s interesting to read that Alibaba’s Jack Ma took a step on his plan for an electronic trade platform to ease the cross border exports and imports of goods for SMEs by announcing in M’sia that M’sia is the first country outside China to sign up to Alibaba’s electronic world trade platform.

What has this to do with the price of eggs?

In Economy on 17/03/2017 at 7:13 am

NUS tops Asia university ranking for second year running

CNA

Given

Jobless graduates hightset since 2004

TNP

And

Irony of irony: “NUS rated tops in world rankings” scream the headlines. But NUS graduates are glorified in the MSM as carving a career driving Uber and Crab car! Well done. Meanwhile employers, including GLCs, are merrily recruiting Pinoys, PRC and Indians from dodgy 3rd rate Universities. Why? Because it’s so EASY!

FB comment

And FT PMETs keep coming in (Only rate of growth is slowing: from cattle truck loads to A380 load) . And plenty of unemployed, underemployed S’poreans looking for jobs.

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Repented that u helped PAP get 70% of the popular vote?

 

Water price hike included meh?

In Economy on 15/03/2017 at 5:10 pm

INFLATION FORECAST AT 1% FOR 2017

Inflation for the year is expected to come in at 1 per cent, unchanged from the analysts’ forecast in the previous survey. For the first quarter of this year, inflation is expected to be 0.8 per cent.

Core inflation – which excludes accommodation and car prices – is expected to be 1.5 per cent for the whole year, slightly above the 1.3 per cent predicted in the previous survey. It is also predicted to come in at 1.3 per cent for the first quarter.

For 2018, headline inflation is expected to be 1.3 per cent while MAS core inflation is forecast at 1.7 per cent.

CNA

So economists don’t think that that the hike will cause inflation, something the cybernuts are screaming their heads out over.

Maybe the economists are relying on the assurance of a junior minister that

the cost of goods, such as coffee and tea, “should not and ought not go up” when participants addressed the trickle-down effect that the water price increase.

TOC

But then we had the assurance of a cabinet minister that water was priced correctly in 2015, juz before the elections.

 

Watergate: MIW caught with pants down

In Economy, Environment on 02/03/2017 at 4:46 am

PAPpies and their running dogs in the constructive, nation-building media and academia and on social media say that the price of water hasn’t been changed for years, so we shouldn’t be getting worked up about the 30% hike (peanuts, really).

But 18 months ago, VivianB said (see below) there was no need to change the price because PUB has improvements in membrane tech and productivity and that the water tariff and WCT reflect the scarcity of water.

So what has changed in 18 months?

Either in 2015 (before GE) the PAP administration didn’t do their homework leading a minster to mislead S’poreans and parly, or in 2017 the cabinet didn’t read what the then minister said in 2015 when making the decision to raise prices.

But then maybe before GE 2015, PAP wanted to get rid of its “Pay and Pay” tag?

Kudos to whoever originally dug this up. I think it is Chen Jiaxi Bernard, a WP man. Well done.

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What the Old Guaed got right/ What the Young Guard ignores

In Economy on 27/02/2017 at 11:20 am

Yesterday, I posted that there wasn’t much difference politically between the PAP Old Guard and the African leaders that governed after independence*.

But these leaders lost power because didn’t help their people achieve material prosperity. It was this prosperity** that gave the PAP legitimacy in the eyes of up to 80% of the voters from 1965 — 1990

Since then the PAP and the economy have been on auto-pilot.

The PAP avoided a crash in 2011, and regained altitude by throwing more of our money our way. What the PAP derided as “welfarism” will be redefined as the “need to attend to the well-being of citizens” (words of a PAPpy running dog in today’s SunT)

But the economy for all the talk of restructuring is still on auto pilot. When S’poreans realise what 2-3% economic growth really means (hope to blog on this soon), unhappiness will grow especially among those who boutht into the idea of die-die must buy pigeon hole in the sky..


*A reader pointed out

The difference is that the old guards viewed themselves as chairman & board of directors of a corporation, and were internally motivated to see the long-term growth of same, staking their own prosperity with that of the country/corporation. That said, a corporation isn’t a democracy.

Africa & Burma strongmen basically were more interested in short-term extraction of maximum wealth & benefits in the shortest time possible, while using guns & muscle to maintain the looting for as long as possible.

Places like India fall somewhere in-between.

**If Lim Chin Siong and friends had won, based on their own words, we’d have gone the way of the Africans and Burmese. Whether they’d made a u-turn is something that can be debated until the cows come home. All I’ll say is that they did not have a Dr Goh Keng Swee on their team.

 

TOC, TMG can rebut this?/ But then PAP is always wrong

In Economy, Environment on 25/02/2017 at 9:34 am

 

TOC, TMG (with a once (and future?) wannable Sith Lord)  and other anti-PAPpists have been complaining about the impending water price hikes.

 

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Singapore MattersLike Page

Your bowl of mee pok is going to cost 30% more because water price is going up by 30%? Your cup of coffee will cost 30% more?

That’s FEAR MONGERING! Quit it!

Put that 30% increase in perspective. If your cup of coffee costs 30% more because water price has gone up, that’s called exploiting the water price increase to raise prices.

Taz wht we had the assurance of a junior minister that

the cost of goods, such as coffee and tea, “should not and ought not go up” when participants addressed the trickle-down effect that the water price increase.

TOC

Then what happens when prices don’t rise?

TOC, TMG and the cybernuts will then complain that sellers of coffee and tea drinks and food sellers are suffering.

Don’t know whether to laugh or to cry.

The PAP is so very lucky in its enemies.

Fault of PAP that economy can’t transform

In Economy on 22/02/2017 at 5:10 pm

David Skilling a director at Landfall Strategy Group, a Singapore-based economic research and advisory firm wrote in an article in ST

My assessment is that the more important constraints on Singapore’s transition to a productivity-driven growth model are those associated with the structure of Singapore’s economy. Indeed, I would suggest that it is exactly because the existing growth model has been so successful that the transition process to a productivity-led growth model is so challenging.

One way of thinking about this is a Singapore version of “Dutch Disease”, in which one part of the economy becomes so successful that it weakens the competitive position of other sectors. This is because the successful sector places upward economy-wide pressure on wages, costs and the exchange rate. In Singapore, as with some other FDI (foreign direct investment)-intensive economies, the MNC (multinational corporation)-heavy sectors are highly productive, and have correspondingly higher wage and cost structures. This attracts resources from elsewhere in the economy, and raises the cost structure for other Singapore firms relative to their levels of productivity.

This is felt keenly by Singapore firms in internationally oriented sectors that have lower average levels of productivity than the large MNCs. The high cost structures faced by these firms make scaling up entrepreneurial and innovative activity into international markets more challenging. This has contributed to the observed difficulties with growing new global champions from Singapore.

http://www.straitstimes.com/opinion/on-singapores-economic-pivot?utm_campaign=Echobox&utm_medium=Social&utm_source=Facebook&xtor=CS1-10#link_time=1487662022&utm_source=facebook&utm_medium=social-media&utm_campaign=addtoany

S’poreans kids only taught one relevant skill, not three

In Economy on 17/02/2017 at 5:47 am

The skills young S’poreans must pick up to get high paying jobs are EQ, maths and coding skills. Taz what the data from the US tells us:

 

But although coding is now being emphasised in the curriculum, EQ is still not. So out of the three skills only maths is emphasised.

But then maybe MoE, like a tua kee from The Middle Ground, no not the Sith Lord wannabe that saw the light after she retired, thinks the US data are “US BS”.

Sad.

Two elephants in the room the CFE report misses

In Economy on 15/02/2017 at 4:32 am

Donald Low points out that people are history

has been a failure of governments to compensate the losers of globalisation and technological disruptions sufficiently. Not only has income inequality increased in most developed countries, but this has been accompanied by wage stagnation for average earners. Technology advances may have created new and better jobs, but they have also caused the disappearance of many jobs that required “middling” skills and earned middle wages—a phenomenon known as job polarisation.

https://www.facebook.com/notes/donald-low/cfe-report-could-have-included-long-term-macroeconomic-issues/1427286870638616

And that there’s nothing in the report about safety nets (rumour has it that recommendations on “stronger safety nets” were taken out because of the PAP’s dislike of “welfarism”):

the state would be called upon to engage in more aggressive fiscal redistribution and to provide stronger safety nets. In fact, such measures are not just a necessary response to higher inequality. They are also an important lubricant of economic restructuring and a complement for measures to promote competitiveness; they make pro-growth policies far more acceptable to workers.

The American experience shows that the middle class is being wiped out by the march of progress, something that will happen here whether or not S’poreans vote for the PAP.

ANOTHER VIEW
Self-driving truck technology for travel on interstate highways, based on artificial intelligence, is already technically feasible. Today, about five million drivers are employed in the industry. A 20 percent reduction in this work force over the next 15 years would equate to a million lost jobs.

How Efficiency Is Wiping Out the Middle Class

Trade and immigration became the boogeymen in the presidential election, but what’s really displacing workers is the advance of technology.

NYT Dealbook

 

CFE report: Another good critick by another Indian

In Economy on 13/02/2017 at 7:25 am

I’m sure you have read Inderjit Singh’s critick of  the Report of the Committee on the Future Economy (CFE), or at least heard of it. If you have not, read it: v.v. good.

But I’m sure you missed the u/m Facebook critick by Devadas Krishnadas. He’s an ex-bureaucrat who now runs his own consultancy: “Future-Moves Group (FMG) is a client-centric, outcome-driven management consultancy founded in 2012.”

He regularly KPKBs in the constructive, nation-building media and the new media, especially on Facebook.

It’s a good piece but has one very serious flaw, a flaw I hope to discuss later this week. See if you can spot what the flaw is.


The importance of having Indian blood

Btw, other than from Chris K (Look out for Terry’s Online Service to reproduce his FB tots), I’ve not seen a good critick by a non-Indian anywhere. Maybe taz why Indians are the master race in S’pore? And why the presumptive Malay president has Indian blood despite being Malay? Having Indian blood is a genetically good thing fir other races? But these questions are material for several posts.)

————————————————————

Facebook post by Devadas Krishnadas.

AN ECONOMY BY COMMITTEE

The much vaunted ‘Committee for the Future Economy’ released its report today. The most impressive thing about the report is the sheer number of contributors. It is cumulative result of the thinking of 30 main members, 218 sub-committee members, some 700 resource persons or who were involved in focus groups and over 225 civil servants. A total exceeding 1200 persons.

The report itself is composed of 109 pages which works out to about 11 contributors to a page of the report. It advocates 7 strategies comprising of 22 related recommendations. This breaks down to more than 170 contributors per strategy and more than 55 contributors per recommendation. There are also 80 supporting recommendations from the sub-committees which works out to about 15 contributors per supporting recommendation.

Doubtless, the committee chairmen would prefer the large pool of contributors to be characterised as an effort to be consultative, inclusive and comprehensive.

Acknowledging the year long effort and the distinguished and lengthy list of contributors, one could be forgiven for expecting more substance in the report.

A report of consequence should be one that does not merely talk in terms of motherhood statements, of which there are too many to list all, just a few examples – “Press on with trade and investment cooperation”, “Support enterprises to scale up”, “Partner each other to enable innovation and growth”.

It should also not be a report about how many more planning activities need to be undertaken. A major recommendation of the report to develop and issue “Industry Transformation Maps” or ITMs for 23 industries. So even more effort into meetings, focus groups, detailed planning and proposals will be forthcoming internally within government.

A report of consequence should be about thinking in terms of what we should stop doing, how we should be rethinking the roles of government, industry and the civil society in the context of constrained economic growth and acknowledging the limits of ‘crystal ball gazing’ which will be winning sectors.

While the intention to think ahead to the future is always laudable. This report reveals more a fixation with the past. This is in the sense that it continues to reflect a belief system that command planning the economy is still the critical success factor and that generating a plan and achieving a result are synonymous. That mode of thinking has not worked for some time but it does serve an essential self-interest – that of justifying an outsized and expensive Rolls-Royce of a public sector to develop, implement and administrate all these gilt plans.

It is high time that it be publicly acknowledged that the Government does not create jobs or value-added. Only the private economy does. We should be thinking in terms of what the government and only the government can and should do, which are areas of co-creation between the government and the private economy and where the private economy should be left to do its thing.

What is needed is fundamental rethinking of the nature of our economy, the embedded structural considerations – both institutional and mind set – which limit or hinder the full exploitation of our economic potential. This should include looking at how and how much the government should be intervening in the economy and revisiting politically charged issues such as population augmentation.

There is one further, basic but yet critical oversight. This is that the report neglected to identify a 24th industry for a much needed ITM – this is the public sector, currently the single largest employer in the country and whose size and wage structure has shaping effects on the labour market.

One obvious recommendation should be for few thousand of the best qualified civil servants to cross over to the very human capital starved private sector, particularly in the small and medium enterprises, to create products, ideas, companies and the jobs of the future.

This may be the most immediate and practical contribution of any report on the future economy. A pity that this does not feature among the long list of recommendations. But then, it is easier to write about a future than to be responsible for making it.

Inderjit Singh’s critick of the CRE Report

In Economy on 13/02/2017 at 4:06 am

Btw, he’s being modest in calling his Facebook post “My Comments on the CFE report”: it’s a very good analysis of the Report of the Committee on the Future Economy (CFE).

Piece reads:

My Comments on the CFE report.

A. Executive summary

On a general note, while the report covers a few important areas, I do see quite a number of initiatives that have been suggested before, from the time we started T21, to the ERC and the ESC. The key is going to be in implementing some of these as in the past we did not achieve the desired results. The key is going to be the details on how the government plans to implement.

I do feel that there are no major new radical ideas that can greatly contribute to the transformation of the economy which we greatly need. In the past, we saw new ideas like – making the finance sector as a core sector of the economy, developing the Life Science industry, implementing the knowledge economy. I was hoping for some fresh and significant ideas that can show us the light a little better. But we should perhaps wait for implementation before brushing off the recommendations made because if they are done well we could achieve the outcome we failed to achieve in the past.
It seems that the government remains in a state of denial about the worrying state of the economy. There seems to be a mismatch between what many companies, SMEs, business owners and PMETs are seeing on the ground versus what the government is telling us – that things are not bad, that many jobs will be easily created. I do believe that Singapore’s economy needs to be structurally corrected and government policies need to be changed significantly in certain areas for us to grow a long term sustainable economy.

For example, although there is some admission that we need to develop more locally grown companies, we need this to be backed by changes in the way the government supports the various sectors of the economy. I was hoping to see greater clarity in this shift of strategy in the CFE. If we don’t make a clear change on how we want the economy to grow in the future, we will never create the local global companies that are very much needed to fuel the economic growth of the future. We cannot keep relying on an old formula that we put in place in the 1960s.

I do feel that the CFE has blamed the current state of affairs solely on the global slowdown which is not a complete picture of our economic woes. We should have also gone deeper into what is wrong locally and addressed those issues as we do need a restructuring in some areas like cost competitiveness, government agencies’ support and the financing landscape that has become very tough for companies.
Below, I am making some more detailed comments for some of the strategies and just minor comment in some areas where I don’t have a good feel of things.

B. Introduction

1. The report has given a broad-brush view of the government’s thinking on the strategies they plan to adopt in the coming years. My initial reaction is that many of the ideas spelt out were expansion of many initiatives that the government had already been working on for many years. For example, since 1999, we first started looking catalysing the VC industry through the T21 programme which has limited success and we are seeing the same recommendation again. I hope in implementation, the government will study the issues with past programme so that we don’t make the same mistakes.

While the CFE pointed to the changing global landscape, I would have thought a little introspection was also needed to study what has changed in Singapore. A few things have changed drastically;

a. Cost structure in Singapore has changed, making us uncompetitive. Land cost, rentals, REITs are all issues;

b. Financing environment has shifted, making credit more difficult to come by;

c. MNCs are shifting out faster than before because we have become less competitive and also because other cities can offer better terms and a lower cost structure with easy access to manpower. Along with the flight of MNCs, our SMEs will have to either leave Singapore to follow the MNCs or shut down.

d. Manufacturing is very important and we should keep it at least 20% of the economy, but we don’t have enough homegrown companies with deep manufacturing capabilities. Economic strategies of the past focused on prioritizing new areas of technologies or capabilities instead of deepening the skills and strengths we already developed in the past. For example, we have lost the disk drive industry, while the semiconductor industry has a few big MNCs players but we have lost most of the local big players because we lost technological competitiveness and did not invest enough in R&D. So, every 15 to 20 years a new focus on a new industry cluster instead of retaining the core capabilities we already developed over the years.

I therefore feel the CFE missed the opportunity to study what weaknesses Singapore has developed and how to overcome these. The CFE could have recommended some near-term plans to resolve some key current issues hindering our ability to restructure the economy. Because without resolving the issues the longer-term goals may be more difficult to achieve.

My bigger worry is that we will see huge structural problems that will take a long time to resolve if we don’t change the economic growth model of the country – rebalancing the contribution of FDI and MNCs vs local companies.

C. Specific comment on some of the sections;

1. Deepen and diversify our international connections
This is important and is something Singapore has focused on since the beginning, 50 years ago. It remains important as we are a small market. I would like to see how local companies, especially SMEs can benefit from these. I feel many of the FTAs benefitted larger companies and not many small companies benefitted. So, I hope in implementation we will focus on helping more start-up and SMEs benefit from this connectivity.

The government needs to also be more aggressive to tap further away emerging markets. The last major frontier is Africa. Most developed economies are already playing a key role in Africa while Singapore has not even seriously started with serious support structures for companies that already ventured there. Most of the companies who are in Africa have done it on their own with negligible direct support from the government.
autonomy and flexibility to manage their GIAs. We should allow different models to develop and not imposed a central government driven model.

2. Acquire and utilise deep skills
This will be very important especially if we want to anchor the IT and manufacturing sectors in Singapore. The compensation system needs to favour people with deep skills as much as those with general management. For this to succeed, society and government need to change their mindset.

I think the issue with PMETs who lose their jobs and go for reskilling is that they go through a training programme without knowing if they will get a job at the end of the training. To encourage more people to upgrade themselves, the government should start the reverse way – match PMETs to jobs and then they go through a OJT or part-time training programme. Salary support can come from government to incentivize companies to hire such people and train them. The Professional Conversion Program where the government pays up to $4,000 monthly salary to the company when they hire and re-train the employee is in place. The agencies managing this need to identify why the take up is not as much as desired to be effective in absorbing the displaced PMETs

There is also a need for closer management of the work pass system to make it more difficult for companies to hire foreign professionals who are not among the best in their fields. Unless they are best, companies should be compelled to hire Singaporeans and be give a 1 to 2 year training programme to build up their skills, with salaries supported by the government.

3. Strengthen enterprise capabilities to in novate and scale up

I find the recommendations here repeating what the T21 recommended in 1999 and what the ERC recommended in 2002. Yes, there is a need of more innovation and creation of new enterprises. How we do it is very important. I do believe the ERC did achieve the key objective of encouraging more entrepreneurship among Singaporeans and we already have an ecosystem that supports start-ups well. What is missing is their ability to grow beyond their start-up phase for a few reasons;
a. Market Access
b. Growth Capital
c. Management skills

It would have been useful if the CFE addressed these issues.
The recommendation of smaller companies partnering bigger companies has been made many times over the last 20 years and we have no seen great success. Unless there are new ideas I see this as motherhood in nature.

The ESC and also ACE in the past recommended an Exim bank to be set up to support overseas projects. The government accepted the ESCs recommendation but this never materialized. The CFE has recommended a few schemes in the areas of financing support. I hope this time we will see better outcome.

I disagree with these recommendations :
a. “Significantly grow the community of IP and commercialisation experts”
b. “bringing in dedicated commercially-oriented entities that are focused on the commercialisation of IP

We need less control and more flexibility in our commercialization efforts. To many lawyers and experts will slow down the process. I have seen this happening in many cases where the researchers and the entrepreneurs get too tried dealing with too much of bureaucracy and failing to spin-off a company or the commercialize the IP.

It is a pity that after spending so much in research, I believe in the region of over $40b in the last 20 years, Singapore has not scored well in innovation and creation of enterprises despite the large amount of money spent.

The few things I liked in the report are;

a. “The standardized IP protocol” – I believe many start-us and spin-offs don’t get formed because of rigidity of some of the RIs in wanting to control more or wanting to earn more form the IP they developed. The end result has been that the IP remains on the shelf and does not get an opportunity to be commercialized. I would suggest IP be made relatively very cheap and RIs practice flexibility to encourage more researchers, SMEs and entrepreneurs to want to innovate and commercialize new products and hopefully create a few big winners. Even if the IP was given out for $0, the value added to the economy can be significant – so the RIs should not see themselves as entities that have to earn more income from the IP (because the R&D grants should be seen as government’s investment for the general economy and not for the RIs own benefit).

b. “Provide high-growth enterprises with more dedicated and customised support” – the best way for this to happen is to bring all government agencies dedicated to SME and start-up support under 1 umbrella. The CFE suggests “ lead Government agencies could be assigned to coordinate all Government assistance rendered to enterprises”. This has been recommended before but has not worked well. We should bite the bullet and create a one stop all encompassing SME and start up agency – like a “Local EDB” with the same resources, power and funding like EDB. It sis about time we have one Local EDB that follows the company from birth till the company become a global SMEs (and supported by agencies who may be experts in certain horizontal agencies – IT, Internationalization, Finance, etc.). These verticals should be invisible to the SMEs if the LEDB coordinates everything.

c. “For unlisted companies, the Government should facilitate the creation of a private market platform”- This is important for money to circulate faster for investors. Today, may investors wait a very long time before they can exit from a company – by an IPO or a trade sale. IN countries like Taiwan, private equity exchanges are really private, with minimal government regulation. If investors can cash out earlier through such private equity exchanges, it will encourage them to invest more money in start-up and growth companies.

Having said that, this is not a new recommendation, ACE made this recommendation about 15 years ago, and it took a long time for the government to respond and when they did, we created such a private equity platform, called the “OTC”. This platform last just a few years before being shut down because of very unfriendly government regulations, particularly from MAS. I suggest the government study why the OTC failed before implementing another similar platform. Otherwise this recommendation will not translate to an effective outcome. I acknowledge however that part of the problem then was also because we were too ahead of time and there were no good start-ups here to invest in yet. Hence, the VCs invested outside. The eco-system is more mature now and we do have a good crop of start-ups. The key question is how to continue to anchor their key value adding activities in Singapore as they scale given our small market.

4. Build strong digital capabilities

Excellent initiatives suggested by the CFE and the future economy need to get the digital capabilities right for us to compete well in the global economy. SMEs and start-ups must be able to easily access these so that they don’t have to invest too much in the same capabilities.

5. Develop a vibrant and connected city of opportunity

I would say these recommendations are not new and the strategies have been in place for the last 30 years or so. But these are areas that gave Singapore our strengths that attracts investments and we need to continue to build on these.

6. Develop and implement Industry Transformation Maps (ITMs)

I believe the ITM strategy needs to change drastically as the proposal is no different from what has been done in the past with multi agencies working with companies. We do need a one stop local Enterprise agency to deal with companies from start-up to the time they become global Singapore companies. I don’t see for example EDB being able to play a useful role in supporting local companies in the clusters they are responsible for.

From the government’s perspective, the ITMs are a very useful way to plan the future industry clusters but the current approach of appointing lead agencies to champion certain sectors is flawed and outdated. The future industries will not come from clearly defined sectors but from a mix of sectors. For example, future retail will have to encompass retail, IT, logistics and Finance (payment systems). In the current Map, Spring is in charge of retail, MCI in-charge of IT, EDB in charge of logistics and MAS in-charge of finance. So, by giving each government agency one sector to manage, we will see things falling into cracks.

It would have been better to reorganize the government agencies to verticals – size and stage of a company – i.e. start-up/SMEs, MNCs, GLCs, Local MNCs and Horizontals – by technology or core competencies. This will require a major reorganization of government agencies. I would have expected the CFE to be more radical in the recommendations for this area as the old models will not work well in the future as we will see companies emerging from nowhere and becoming big and big companies leaving Singapore or completely disappearing.

Furthermore, I have seen in the past that EDB had been ineffective in handling SMEs as their key focus is to attract foreign MNCs. So when a SME in a logistic sector needs support for EDB, they have not been getting the support they need. A former EDB chairman once commented to me when I challenged him and this was his response : “What did you expect me to do, I had a sledgehammer to handle the elephants (MNCs) and the ants (SMEs), so I decided to handle the elephants and ignored the ants”. Of course, it is easier to show results for your KPIs by spending a lot of money to attract MNCs than to work with many SMEs for the same or lesser results. So, if EDB continues to champion clusters for MNCs and SMEs, I am quite sure the SMEs will once again be left behind. Currently, it is a case of too many hands (WSG, SSG, SPRING, IE Singapore, IMDA, JTC), making it rather unproductive with each agency chasing their own KPIs. Sharing of info is also a challenge. There is no universal CRM for businesses with its profile and growth info. But the situation is also different. There are only about 8,000 MNCs but 180,000 SMEs. Maybe another solution is to have a Small Business Agency and a Growth Enterprise Agency. In implementation, I hope the restructuring of government agencies supporting the economic development of Singapore will be seriously relook at.

7. Partner each other to enable innovation and growth

This is also not a new area of focus. We had these strategies before and these are still relevant today. The biggest change that is need is the public sector to be willing to experiment with innovation by partnering start-ups and SMEs. We had some past success – eg Hyflux but we could do with many more, so I hope to see a change in the attitude of the civil service and government agencies to make this happen.

Singapore companies have a bad track record of working together to win business opportunities overseas. Somehow the large companies are not keen to partner smaller companies and SMEs don’t seem to trust the larger companies and we have not been able to create the spirit of cooperation unlike what we can see with Japanese, Korean and Taiwanese companies. I hope there are great ideas to change this mindset among Singapore companies.

D. Conclusion

The CFE has worked hard to study the Singapore economic landscape and suggested their strategy for the future economy. While the paper is not as inspiring as hoped, there are many details that need to be looked at and the key is successful implementation. We have seen some successes of the ERC and the ESC but we have also failed in a number of areas, productivity being a key failure. To a large extent, the issues we the past strategies were not the ideas but how they were implemented. The government needs to understand why there was failure in implementation because if they don’t understand what went wrong, we risk another round of implementation missteps which may not yield the desired outcomes. It is important that the government agencies responsible for implementation have a much better feel of the ground so that they can get things right this time. The CFE report is out, this is the best we have. We all need to work hard to recreate a vibrant economy of the future for the future of Singaporeans. Hopefully more good ideas will emerge at the implementation stage. We also need to know what we are working towards. So implementation is key, but unlike the ESC we don’t have KPIs here or major timelines. Greater clarity is needed on this.

Really? “Singapore Says Asian Growth Helps Offset U.S. Trade Threat”

In Economy on 07/02/2017 at 4:31 am

(Or “EDB does alternative facts”)

“A lot of our manufacturing here is to address the needs and opportunities in Asia.”

“Singapore Says Asian Growth Helps Offset U.S. Trade Threat” 

Erm. A lot of the opportunities and needs in Asia come about as a result from the ultimately exporting to the US of A.

Here’s a chart from the Bloomberg article

Juz google “Export data” and

— China’s main export partners are the United States (18% of total exports), Hong Kong (15%), the European Union (16%, of which Germany, the UK and the Netherlands account for 3% each), ASEAN countries (12%, of which Vietnam accounts for 3%), Japan (6%) and South Korea (4%)

— Malaysia’s main export partners are: Singapore (14%), China (13%), European Union (10%), Japan (9.5%), the United States (9.4%) and Thailand (6%).

Need I say more?

But there’s more: the chart below (courtesy of Chris K) shows that we are among those countries that will suffer the most from the imposition of a US border tax. But we’ll be happy that M’sia will be more badly affected. As will Thailand and Vietnam.

Image may contain: text

Again the effects on big exporters to the US like China and M’sia will also affect their trade with us.

So what cock is the chairman of the EDB talking? And what weed is he smoking?

Finally remember when reading the u/m from EDB remember what I said recently about FDI numbers: FDI does not always result in new physical investments, with new jobs to match it. Often FDI is the transfer intangible assets for the purpose of lowering corporate tax.

Investment commitment levels in Singapore are expected to be similar to those seen in 2016 amid uncertainties in the global economic environment, the Economic Development Board (EDB) said on Thursday (Feb 2).

At its 2016 Year-in-Review press conference, EDB said it will seek to consolidate Singapore’s position as a high value manufacturing base by capturing opportunities in advanced manufacturing. It will do this by anchoring lead adopters of advanced manufacturing in Singapore, while building up an ecosystem of suppliers and enablers to develop technologies and solutions, the agency added.

And

http://www.channelnewsasia.com/news/business/singapore/2017-investments-likely-to-remain-similar-to-last-year-s-edb/3486220.html

Btw, maybe FDI levels are projected to remain static because MNCs are expected to cut back their use of tax havens following public outrage in the West after revelations of the tricks (not all legal) they use to mininise tax?

Luxembourg is already expecting this and if it happens there, it’ll happen here. Remember Oz miners are on the rack after it was revealed that they use S’pore to minise taxes on their exports of minerals from Oz?

True in US: True here too?

In Economy on 30/01/2017 at 4:36 am

“If businesses saw more value in investing in US workers, they could have done so” was part of the headline of an article on the US on why manufacturing jobs were history in the US.

Given our low worker productivity record especially in the SME sector, it’s clear that SME owners see no value in investing in S’porean workers. Why should they, given that they have access to FTs willing to work for less than S’poreans?

So the 70% of voters that voted for the PAP are either state bureaucrats, or work in sectors not affected by FTs? Can’t be. Must be some truth that some PAP voters are as daft as anti_PAP cybernuts.

Fake news about Chinese port investments here isit?

In China, Economy, Infrastructure, Logistics, Shipping on 19/01/2017 at 5:25 am

Recently the anti-PAP cybernuts have been gleefully predicting the economic demise of S’pore what with a recent spate of reports on Chinese initiatives

— China and M’sia to build a major port in Malacca;
—  China was looking to build the Kra Canal; and
— the first freight train to make the journey to the UK.
They are saying part China wants to take business away from our port ha, ha ha.
One Eugene Tavano has been particularly vocal on TRE especially on the freight train service, not realising are already regular train services* to Germany (and Spain I think), which have not affected S’pore’s port. But then cybernuts are like that: blur factually. Think Tan Jee Say (who compares our economy unfavourably with that of PeenoyLand instead of with HK, Taiwan or  South Korea), and Philip Ang and Roy Ngerng (on our reserves etc).
Eugene Tavano (What a Peenoy sounding name: FT here?) is also been very vocal on the M’sian port.
So maybe they know that the u/m is “fake” news? But when another cybernut posted links on Facebook about the M’sian port and Kra canal projects, gleefully predicting gloom for S’pore. I posted the u/m link on Chinese investment here and asked if was fake news? No response.
Most likely then the nuts don’t seem to realise that there’s a 2016 Chinese agreeement to invest in three new megaberths here which will ensure S’pore maintains its global ranking.

Hong Kong-based COSCO Pacific and PSA Singapore have signed a new investment agreement in Shanghai, China today to co-invest in three new mega berths at the Phases 3 and 4 expansion of the Pasir Panjang Terminal which was opened last year.

The investment will be implemented through a joint venture Cosco-PSA Terminal (CPT) and allow for the arrival of mega container ships at the new container berths in anticipation of trade growth and growth in size of boxships plying the international waters.

The new mega berths are slated to begin operations from 2017. According to PSA, they will be fully integrated with PSA’s infrastructure and supported by the automated and intelligent port technologies.

The co-investment agreement is strategically important to both partners and will help them up their competitive game. It is also a clear demonstration of China COSCO Shipping’s confidence in Singapore as a well-connected transhipment hub. I believe the project will also contribute positively to China’s Maritime Silk Road initiative and “One Belt, One Road” vision,” said Singapore’s Senior Minister of State for Finance and Transport, Josephine Teo.

COSCO Pacific is a subsidiary of China COSCO Shipping, which was formed following the merger of China‬’s two largest shipping companies, COSCO Group and China Shipping Group. The merger created the 4th largest container shipping line in the world.

Cosco Pacific and PSA formed Cosco-PSA Terminal Pte Ltd (CPT) in 2003 to manage and operate two berths at Pasir Panjang Terminal.

http://worldmaritimenews.com/archives/187056/cosco-pacific-psa-to-invest-in-mega-berths-in-singapore/

*Update at 2.00pm: The UK’s biggest supermarket, Tesco, doesn’t have any goods on this particular train but does use rail to carry toys, electrical goods, homeware and clothing from China to European rail hubs such as Bratislava in Slovakia and Krasnaje in Belarus.

BBC report

 

TPP sucked but only cybernuts celebrate its demise

In Economy on 16/01/2017 at 4:43 am

Why it sucked

Economists, int’l media and our local media say

The TPP, which brings together 12 Asia-Pacific countries accounting for roughly 40 per cent of global GDP as signatories, is often hailed as a seminal trade framework that will enable exporters to benefit from the removal of duties on more types of goods than previous trade agreements provided for.

BT

Well this letter made it to the Economist’s “best letters from our readers in 2016. Our letters editor picks submissions that sum up the year”. It tells us what conventional wisdom omits

Why they’re right
A lot of what you said in your leader on trade and globalisation made sense, but those who oppose trade deals are not “wrong” (“Why they’re wrong”, October 1st). Free-trade deals have changed remarkably since the repeal of the Corn Laws in the 1840s. Accords such as the Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership and the Comprehensive Economic and Trade Agreement are more about protecting the interests of large multinational corporations than they are about reducing costs for consumers and promoting competition.

These deals expand intellectual property rights, increase patent protections and enable foreign companies to sue governments for alleged losses of potential profits in supranational courts through “investor-state dispute settlements”. This is what the protesters are most opposed to: noxious provisions that boost the economic power of large corporations at the expense of democratic governments, smaller businesses and individual citizens.

TOBY SANGER
Economist
Canadian Union of Public Employees
Ottawa

And there was this too:

Globalisation is inevitable, but the current configuration favouring neoliberal politics and economics is not. It is entirely possible to integrate domestic economies in ways that do not favour capital over labour or inequality over equality. More social democracy would address that.

The case for free trade has rested on a confusion between two notions of efficiency: Kaldor-Hicks and Pareto. Free-trade agreements are Kaldor-Hicks efficient because they produce overall net gains to welfare, but they are not Pareto efficient in that they do not make some better off without making some worse off. Economists and politicians have been too quick to point to the former type of efficiency but ignore or downplay the latter, thus producing a backlash.

Something is Kaldor-Hicks efficient not only if it actually maximises net wealth but also when losers are compensated for their losses. Somewhere along the line economists and politicians forgot this part of the equation.

PROFESSOR DAVID SCHULTZ
Editor
Journal of Public Affairs Education
St Paul, Minnesota

But why it matters to us

But for its faults, the anti-PAP cybernuts like the TRE ranters, Tan Jee Say, Goh Meng Seng, Philip Ang if they really care about their fellow S’poreans (which incidentally I don’t think they do. They are S’pore haters.) are wrong to cheer the defeat of an initiative where PM invested so much time, and effort.

As BT says

The setback for the TPP comes at a crucial time for Singapore, which is in the middle of drawing up a blueprint for its future economy – one in which internationalisation figures prominently, in order for its economy to grow externally.

And growing Singapore’s external pie has become increasingly crucial, given that its economy can expect a “new normal” of only 2-3 per cent annual growth, said Deputy Prime Minister Tharman Shanmugaratnam in September.

Although it is expected to boost Singapore’s gross domestic product (GDP) by only 2 per cent by 2025, the increased trade activity is expected to strengthen the city state’s role as a regional entrepot hub.

Forget the BS about “a blueprint for its future economy” (such a plan comes around once every decade) but we benefit from globalisation especially in trade and finance, both of which are slowing down.


Martin Wolf of the FT on the global trade slowdown

“Between 1960 and 2015, world trade increased at an average rate of 6.6 per cent, in real terms, while output grew at an average rate of 3.5 per cent. Between 2008 and 2015, however, average annual growth of world trade was 3.4 per cent in real terms, while world output grew at 2.4 per cent. Not only has the growth of trade slowed, but the gap between trade growth and that of output also fell sharply.”

——————————————

And as PM said, S’pore would find it very difficult to get as advantageous terms, in bi-lateral deals. We are too small.

So even if PM is gross over-paid compared to Ah Beng, Mat, Gregoh or Ah Neh, let’s not diss him for trying to secure the TPP and failing. Juz KPKB that he should take a 90% pay cut but won’t for failing a KPI that is really impt for S’pore.

 

 

When PAP boasts about FDI, remember this

In Economy on 12/01/2017 at 4:54 am

It’s the time of the year when the PAP administration will do via the EDB its regular Trump-like claim that it met the FDI target for the previous year, and talk about jobs and value-add to the economy.

So remember this extract from the Economist, the PAP’s real bible or sacred text*

But these days FDI does not always result in a new factory, research facility or office building, with new jobs to match it. Often it amounts to a transfer of intangible assets for the purpose of lowering corporate tax.

http://www.economist.com/news/special-report/21707836-foreign-direct-investment-mostly-welcome-large-short-term-flows-spell-trouble

*Singkies real dumb. No need pay millions for ministers. Juz subscribe to the Economist.

PAP really loves FTs over locals, really they do

In Economy on 04/01/2017 at 6:47 am

Actually to be fair to the PAPpies, Asian countries generally think FT tua kees. I kid you not.

Here’s why.

S’pore slipped five places to 15th in the latest world-talent ranking by Swiss business school IMD it was reported in November

IMD World Talent Ranking 2016

This despit first in “science in schools”, second in “university education” and “educational assessment – PISA” and third in “educational system” and “student mobility inbound”.

S’pore doesn;t grow its own timber

It fell in the overall ranking because it fell behind in investing in and developing homegrown talent, said the report. It emerged only 38th in the sub-ranking for this.

Arturo Bris, the director of the IMD World Competitiveness Centre, was reported by BT as saying: “There’s no doubt that many Asian economies, Singapore arguably chief among them, remain among the very best attractors of talent from abroad.

“There’s no doubt, too, that they’re able to improve their overall competitiveness as a result of the knowledge and experience this foreign talent brings – but this isn’t enough to compensate for the lack of development of local talent, particularly with regard to the paucity of public-sector investment in education.”

In an e-mail to The Business Times, he identified inadequate investment and development of its own talents as one of Singapore’s biggest weaknesses. He noted that Singapore’s spending on education declined from 3.08 per cent of its gross domestic product (GDP) last year to 2.99 per cent this year, which is lower than 55 of the economies in the IMD ranking.

Singapore also did badly in pupil-teacher ratio, ranking 41st for primary education and 35th for secondary education.

Well one Ngiam Tong Dow (Rememember him?) was very local that S’pore had to “grow its own timber” (his words) to move on up the development ladder. Too bad for S’pore the PAP administration isn’t listening.

But now that an ang moh is saying the sae thing, maybe the PAP adinistration will listen.

“How has the pie been shared during the PAP years”?

In Economy, Property on 09/12/2016 at 4:47 am

Answer: The pie has grown but PAPpies are gorging themselves while ordinary S’poreans get thinner slices of a bigger pie.

In a response to a very negative analysis (sometimes sounding like something a TRELand nut would write*) https://www.breakingviews.com/considered-view/singapore-stresses-under-a-wealth-of-worries/, a Brad Bowyer responded:

As we head in to strong economic headwinds it would be good to reflect on how the pie has been shared during the PAP years.

In the 1970s a 4 room flat in Marine Parade was approx $20k to buy at a time when the median monthly wage was $300 and the PM averaged $3500 a month

In the 1990s a Marine Parade 4 room flat had roughly doubled to $40k , the median monthly wage was growing fast and at around $1200 had quadrupled and the PM averaged $70,000 a month a 20 times increase.

Today that 4 room flat equivalent is over 800k, a more than 40 times increase in 45 years, the PM get $230,000 a month a 50 times increase over the same time but the median monthly wage hovering around $4000 is only a 13 times increase in 45 years.

The PM has done well relative to the HDB pricing as his income has outstripped all increases in costs and he is nett much better off. For the average Singaporean however even though their nominal monthly income has increased in real terms their purchasing power has decreased and they are now 3 times worse of than their 1970’s bretheren in terms of an HDB housing purchase.

Where before you could pay off an HDB in a few years, have a single working parent family with several children and a reasonable life now a 2 income family would struggle to pay off their flat in their lifetimes and having even 1 child is a major challenge.

Singapore may have had economic success in the past in terms of dollars of GDP and be a great place for the top few % who take care of themselves but it has all been done at the expense of everyone else.

This trend of all the benefit only going to the few will continue unless the government changes to one that wants the best for all its people and not one that is focused on wealth for itself and only doing the minimum possible to keep its captive labor force fed and working and not much more.

As times get tougher and even those nearer the top start feeling more pain I wonder will we finally reach a tipping point where true change can finally be considered and made a reality?


 

*Is she seriously trying to compare a US$55,182 GDP per capita country against a US$2765 per capita one? The Philippines is growing , but a weak economy (partly due to a weal global economy) does not mean S’pore has become the Sick Man of Asia? And how come Peenoys still trying to find work here?

Trump is bad news for S’porean mortgagors and property prices

In Economy, Financial competency, Property on 08/12/2016 at 4:36 am

As stated here, The Donald’s warning to US companies to manufacture in the US will only help accentuate two interconnected secular trends that are no good for S’pore’s growth prospects: slower global trade caused in part by onshoring (companies making more products locally).

Slow growth not good for property prices.

Next, Trump wants US cos to repatriate their money overseas (US$1trn is a conservative estimate) to make America Great Again. He’ll offer tax concessions in return.

According to a FT report, the repatriation of billions of dollars of overseas corporate deposits could rattle the global money market, where they constitute an important part of the offshore funding base: think Libor and Sibor.

This will affect S$ interest rates, causiing them to rise further then expected because of Fed actions.

Finally, with a fiscal stimulus in the US, Fed be more prepared to raise US rates. This will affect S$ interest rates, causiing them to rise.

So the vultures are circling and the Singkies with housing loans up to their eyeballs (if car loans and personal loans are included, up to their eyebrows) had better watch out. We’ll be joining Perth.

Will the 70% still vote PAP?

Economic restructuring: This time, it’s really different

In Economy on 07/12/2016 at 4:44 am

Speaking to a group of students at the Singapore Institute of Technology, Prime Minister Lee Hsien Loong said on 24 Oct that he is confident S’pore is taking the right growth strategies to move forward.

“We are feeling the pains of restructuring, but not yet seeing the dividends of our hard work. But we are pursuing all the right strategies, and I am confident that given time these strategies will work for us.”

————-

The Committee on the Future Economy (CFE) will soon issue a report addressing  five key themes: future growth industries and markets; corporate capabilities and innovation; jobs and skills; urban development and infrastructure; and connectivity.
Indeed, in updating the 2010 Economic Strategies Committee (ESC) report headed by Tharman), the 30-member CFE will have to take into account new global and domestic realities. Chaired by Finance Minister Heng Swee Keat, the panel has been tasked with developing economic strategies to keep Singapore competitive; it aims to complete its work by the end of 2016.

As part of this effort, a working group has been formed under CFE to study how to better help small- and medium-sized enterprises (SMEs) “restructure and tide through challenging times”.


I’m sorry but

“We are feeling the pains of restructuring, but not yet seeing the dividends of our hard work. But we are pursuing all the right strategies, and I am confident that given time these strategies will work for us.”

smacks of “Jam to-morrow and jam yesterday – but never jam to-day”*

Pardon my cynicism.

We’ve been here before. How many times has economy been “restructured” since the 80s? And how many times have SMEs been helped to  “restructure and tide through challenging times”?

——————————–

Another decade, another restructuring report?

In the 80s, one Lee Hsien Loong as trade and industry minister headed a committee to recommend changes in the economy. In the early noughties when DPM he headed another committee on the same issue.

 In 201o, one Tharman and his committee produced the 2010 Economic Strategies Committee (ESC). And now there’s the CFE. It’s a bit early, but then there wasn’t a report in the 90s: so maybe making up for lost time?
——————————-
But this time, it’s different, really

In the past the spin before the release of a report was always that it was going to be game-changer, this time to my surprise the constructive, nation-building BT** said don’t expect much from the report (Something that could and should have been said about the other reports too).

First there’s the question that looms large is whether or not the CFE report will contain anything “large and decisive enough to make an impact”, as an economist put it.

What don’t trust PAP isit? See Heng no ak? Why liddat?

And then

private-sector economists caution against hopes for a big bang outcome that will significantly address Singapore’s immediate challenges.

That’s largely because technological disruption and the rapidly-changing global environment make earlier strategies – such as the tactic of picking winning sectors to boost economic growth – tougher to execute.

Other domestic factors weigh heavily as well.

It quotes Bank of America Merrill Lynch (BAML) economist Chua Hak Bin on why restructuring will be difficult.

“It’s that much harder now to retool the economy. Singapore has already reached such an afluent stage, and there’s the sense that there are a lot more constraints now – such as ageing demographics and the inability to tap on talent as freely as before.”


Err what about secular global trends?

[T]wo interconnected secular trends that will affect S’pore’s growth prospects: slower global trade caused in part by onshoring (companies making more products locally).

————————————

He talks about

— most find it difficult to imagine how the panel can match past watershed moves – including the decision to create a private wealth management industry from scratch, or the introduction of casinos to boost tourism, or the slashing of income and corporate tax rates.

— the likelihood of a “tinkering at the margins” is high. “I don’t think the policy flexibility is as wide as it was previously, despite the 2015 election result (in favour of the ruling People’s Action Party). It’s no longer just about reviving growth – a lot of social and political constraints have now come into play.”

BT also surprised by quoting CIMB Private Banking economist Song Seng Wun who said the govt had to restructure itself: the government must also think about how it can restructure itself, so as to support the needs of the future economy.

“Rather than point the finger, the government should maybe take a look back at itself … For example, everything is so intertwined now, so rather than having the EDB (Economic Development Board), IE (International Enterprise Singapore), and Spring Singapore existing as separate entities with different functions, why not regroup them into one again? Singapore is a small economy; it can be done,”.

Ownself reform ownself?

But BT being BT has to have a constructive, nation-building bit to show it isn’t TOC:

Still, even as the country looks ahead to seek sustainable growth and opportunities for all, economists stressed the need for Singapore to hold fast to its existing strengths.

“Alongside these new and higher aspirations, we’ll need to be careful that our policies don’t threaten our existing strengths,” said Dr Chua, citing Singapore’s port and financial services sectors as strategic leads to retain.

And then as if on cue it quotes Mizuho economist Vishnu Varathan who thinks there is scope for Singapore to reinvent its hub status – especially with Asean’s ambition of creating a single market and production base (obstacles to that lofty goal notwithstanding) …”I think Singapore has actually underrated itself in areas of competency like regional law and intellectual property law. We already have a nice network of finance marrying up with legal and accounting standards that we can leverage on … That’s where Singapore will have to position itself – as a premier services producer that will enhance the rest of Asean as manufacturing base. In essence, we become the finance department, the legal department, and the front office of this entire (AEC) institution … Even if I can’t get my finger in that pie my neighbour is having, I want to be the one providing him with the silverware to eat off that pie.”

Evidently, the reporting and analysis of the constructive, nation-building media is not really supposed to be “based purely on facts”, as a CCP document said it should be. It’s all about praising the PAP administration after pointing out its flaws?

Maybe taz why the PAP has forgotten what is economic restructurings are supposed to do?

====================================

*“The rule is, jam to-morrow and jam yesterday – but never jam to-day.”

Jam tomorrow or jam to-morrow (older spelling) is an expression for a never-fulfilled promise. It originates from Lewis Carroll’s 1871 book Through the Looking Glass and What Alice Found There.[1] In the book the White Queen offers Alice “jam every other day” as an inducement to work for her:
“I’m sure I’ll take you with pleasure!” the Queen said. “Two pence a week, and jam every other day.”
Alice couldn’t help laughing, as she said, “I don’t want you to hire me – and I don’t care for jam.”
“It’s very good jam,” said the Queen.
“Well, I don’t want any to-day, at any rate.”
“You couldn’t have it if you did want it,” the Queen said. “The rule is, jam to-morrow and jam yesterday – but never jam to-day.”
“It must come sometimes to ‘jam to-day’,” Alice objected.
“No, it can’t,” said the Queen. “It’s jam every other day: to-day isn’t any other day, you know.”
“I don’t understand you,” said Alice. “It’s dreadfully confusing!”

Wikipedia

**http://www.businesstimes.com.sg/government-economy/singapores-future-economy/harder-now-to-retool-singapore-economy

 

Two global secular trends that will adversely affect us and PAP’s legitimacy

In Economy, Political governance, Property on 06/12/2016 at 4:36 am

The problem has been for the last eight years, there’s been no economic growth. What we saw travelling with the president-elect, at all these rallies, is that for the average American worker they’ve gone nowhere.

The Donald’s nominee tor Treasury Sec Steven Mnuchin

Well that nightmare for American workers, the Obama and Hilary mafia, their liberal supporters and the US MSM will be coming here soon for S’poreans and the PAP.

S’poreans know that the economy is slowing but most expect a rebound to normal times: hence property prices are holding up pretty well.

But there are two interconnected secular trends that will affect S’pore’s growth prospects: slower global trade caused in part by onshoring (companies making more products locally).

Until the 2008 global financial crisis, trade growth outpaced economic expansion in most years. But since 2012, the two growth rates have been roughly similar. The World Trade Organization forecast in September that global trade volumes in 2016 will increase by 1.7% on the year, compared with projected global economic growth of 2.2%.

Improved manufacturing technologies and rising income levels in emerging economies have reinforced this trend. Companies have become better able and more inclined to make products locally. Narrowing wage gaps between developing and industrialized countries have made the conventional system of producing goods in countries with cheap labor and exporting them to richer nations less attractive. Economies have also become more dependent on online services, for which shipping capacity is irrelevant.

 http://asia.nikkei.com/magazine/20161124-S.O.S/On-the-Cover/Shipping-lines-plunge-into-a-war-of-attrition

And The Donald’s warning to US companies to manufacture in the US will only help these trends.

The PAP has what is called “output legitimacy”. S’pore is a de-facto state in large part because of the PAP’s reputation (albeit waning what with cock-ups in public transport, public housing and PR) for competence, particularly in its handling of the economy and its ability to raise living standards.

Coming back to Steven Mnuchin

Wage increases and good jobs. Taz what the PAP needs to do to keep its share of the popular vote closer to 70% than to 60%. The two interconnected secular trends that will affect S’pore’s growth prospects (slower global trade caused in part by onshoring) will not help.

Temasek and GIC had better step up their game so that the PAP administration can make up (via welfare) for the fall in living standards if these trends persist (or worse strengthen): loss of jobs, low or non-existent wage increases (if not pay cuts) and the fall in property values.

Hopefully, the Oppo and others opposed to the PAP’s hegemony speak up to point that it’s S’poreans money that is being spent on welfare, so no need to be grateful to the PAP.

We paid for these PAP goodies in advance via forced savings: CPF contributions and Budget surpluses.

PAP never sleeps, Fintech shows why

In Economy on 11/11/2016 at 1:52 pm

Recently I reported that the authorities seem to understand what fintech is about and I quoted the FT in support of my point.

Here’s another quote from the same FT article which shows why the PAP is so formidable an opponent on the political arena:

In Singapore, Mr Galligan’s colleague, Christopher Wood, refers to “the threat of disruption from government-prompted efforts to promote a new digital economy — be it in fintech, ecommerce, data technologies, transport, cleantech or the so-called sharing economy in general”. Still, Singapore appears to realise that a government that defines its mission as protecting the interests of the establishment will merely accelerate the decline of that establishment. So far, its stance is paying off. “Supportive government policies and the strongest ecosystem in Asia have already spawned the early stages of a new economy,” Mr Galligan says.

Anti-PAPpists are wasting their time?

 

The real reason why productivity is so bad

In Economy on 06/11/2016 at 4:49 am

From young, S’poreans work hard but stupid, not smart.

Longest homework hours

1. Shanghai
2. Russia
3. Singapore
4. Kazakhstan
5. Italy
6. Ireland
7. Romania
8. Estonia
9. Lithuania
10. Poland
11. Spain

In Finland and South Korea, two of the countries with the best student performances according to PISA – the average time spent on homework every week was less than three hours.

http://www.bbc.com/news/world-europe-37873805

(More on the Finnish way: http://www.bbc.com/news/education-37716005)

All the above countries in above table have more than six hours of homework a week. So no correlation or causation between hrs spent on homework and PISA result.

I repeat, from young, S’poreans work hard but stupid, not smart. Who to blame? Blame the PAP administration who is responsible for the education system.

Lim Swee Say (http://www.theonlinecitizen.com/2016/11/02/lim-swee-say-improve-productivity-or-singapores-competitive-primacy-will-be-risked/) should have a word with the relevant minister of education.

Update at 7.45 pm: More evidence we work stupid from young

The OECD’s top 10 highest performing graduates

  1. Japan
  2. Finland
  3. Netherlands
  4. Sweden
  5. Australia
  6. Norway
  7. Belgium
  8. New Zealand
  9. England
  10. United States

http://www.bbc.com/news/business-37649892

We not on it

As BBC says

It casts a light too on how an efficient school system might not translate into success in higher education.

South Korea and Singapore, both high achievers at school level, are below average in the graduate rankings.

Thanks to Chris K for the info in update.

PM contradicts himself: Strategies were wrong? Tailored messages?

In Economy on 02/11/2016 at 6:08 am

Is PM growing old, forgetting what he said a week ago? Or is he really saying that the old policies have failed? Or BSing to different audiences, telling them what he thinks they want to hear?

Despite slowing economic growth, Singapore is “not in a crisis”, said Prime Minister Lee Hsien Loong on Tuesday (Nov 1), calling instead for a longer-term strategy to continue growing and creating good jobs.

Mr Lee outlined the strategy in his speech at a dialogue with labour movement leaders, noting that Singapore’s growth is still positive despite difficult external conditions like slowing trade and sinking oil prices.

(CNA last night)

Speaking to a group of students at the Singapore Institute of Technology, Prime Minister Lee Hsien Loong said on 24 Oct that he is confident the country is taking the right growth strategies to move forward.

“We are feeling the pains of restructuring, but not yet seeing the dividends of our hard work. But we are pursuing all the right strategies, and I am confident that given time these strategies will work for us.”

(CNA a week ago)

I’m sure regular readers can spot the contradiction, but for the cybernuts who will read this piece if TRE uses it, here’s the contradiction.

A week ago he said that he is confident the country is taking the right growth strategies to move forward, but last night when talking to his NTUC running dogs he talked about a longer-term strategy to continue growing and creating good jobs.

The 24 Oct remarks stated that the PAP administration had the right strategies in place, but the latest by talking about a new strategy implies that the right strategies were not in place.

Cybernuts beng pek mah?

The constructive, nation building media will not point out the contradictions. And neither will the mainstream anti-PAP alternative media because they cut and paste unintelligently from ST. More on the latter, later in the week.

 

Property is not a cheong says Nomura

In Economy, Property on 01/11/2016 at 2:05 pm

Don’t believe the hype about a Singapore property pick-up, Nomura said, as it addressed some “half-truths” …

Not touched bottom yet leh despite

Singapore’s private residential property prices dropped 1.5 percent on-quarter in the third quarter, according to government data, marking 12 straight quarters of declines and the largest quarterly drop since 2009, during the global financial crisis.

[T]he first “half-truth” about the market’s next step was that the city-state’s private home sales had seen strong gains.

Second: signs of a demand pickup for prime luxury properties were overstated.

The third half-truth was that unsold inventory was low, especially in the suburbs.

Another myth was that the vacancy rate for private residential property had finally reached the peak.

[I]t was a half-truth to expect that the prime luxury segment had reached a pricing bottom. It noted that unsold inventory in the core central region was equivalent to more than 100 months of demand, with 76 percent more completions slated for the coming 18 months than in the previous 18 months.

http://www.cnbc.com/2016/10/23/singapore-property-market-shows-superficial-signs-of-recovery-but-problems-run-deeper.html

And don’t forget that the economy’s really weak, even if it’s not yet in a recession.

Those who think property has bottomed out should consult M Ravi’s doctor.

Update at 4.30pm: CNA reports

Following surprisingly downbeat growth figures in the third quarter, a number of economists have cut back their expectations for Singapore’s economy, with DBS being the latest to do so.

In a report released on Tuesday (Nov 1), Mr Irvin Seah, a senior economist at DBS Bank, wrote that he now expects the city-state to log economic growth of 1.2 per cent this year, down from a previous forecast of 1.5 per cent.

For 2017, Singapore’s gross domestic product (GDP) will likely expand 1.3 per cent, given that the sequential decline in the latest GDP figures has lowered the growth trajectory, wrote Mr Seah. This is another marked downgrade from the economist’s long-standing forecast of 1.9 per cent.

After the GDP report, OCBC said a downgrade in its full-year growth forecast was “inevitable” and cut its full-year growth forecast for 2016 to 1.3 per cent, from 1.9 per cent. UOB similarly slashed its estimates to 1.4 per cent, from 2.2 per cent.

Economists at Citi were among the most pessimistic. Even after taking into account the likelihood of a rebound in fourth quarter GDP growth on a seasonally adjusted annualised basis to 2.6 per cent, Singapore’s economy will likely eke out a meagre 1.0 per cent GDP growth for the whole of this year, a step down from previous estimates of 1.5 per cent.

Despite the downgrades, these estimates still remain within the Government’s forecast range of 1 to 2 per cent for 2016.

Tharman waiting for Christmas isit?

In Economy on 25/10/2016 at 4:10 pm

Sure sounds like a recession to me:

1 The head of the Association of Small and Medium Enterprises, which represents 12,000 companies, says firms are not expecting a swift recovery like that which followed the financial crisis.

“This is not ’08-’09, it’s not a V-shape. It’s a sustained, deep-end plateau,” said president Kurt Wee. “Industrial support industries or building contractors and oil and gas are very badly affected and that has a broad based effect on everything else on the ground.”

2 “When you talk to building infrastructure groups, it sounds depressing,” said Kong, who faces a 10-15 percent sales drop this year, the firm’s first in its five-year history.

“Everyone seems to be asking ‘what’s going to happen to me in three months?’ Companies are not getting the orders, there are fixed overheads, so the first thing they do is slash marketing budgets and the next thing is they cut the number of people.”

http://mobile.reuters.com/article/idUSL4N1CT0KE?feedType=RSS&feedName=bondsNews

Technically, it may only be a slow down but as a PAP Old Guard minister (Ong Pang Boon when describing how to identify communists) once said

If it looks like a duck, and quacks like a duck, then it is a duck

So where are the measures PAP to counter a recession? Waiting for Chrismas isit?

And for those ang moh tua kees and TRE nuts and Indian supremacists from “The Idiots — S’pore” (TISG is what it calls itself) who think the sun shines out of Tharman’s ass, the light they see is the PAP juggernaut out to crush fools like them.

Still in denial that recession can be avoided?

In Economy on 17/10/2016 at 3:57 pm

The authorities are waiting for a recession to happen before they act to mitigate its effects, say the govt and its running dogs allies in the media and academia and private sector.

Chris K, a cybernut hero (though he’s no nut) has been KPKBing (on FB) that in the West, the authorities start their mitigation measures before a recession hits. The only defence that the PA govt and central bank can make is that a recession may not happen.

Well given the following signs, does the PAP govt and its running dogs seriously expect that we won’t have a recession? So why not start the mitigating measures?

1 Exports in Singapore fell a disappointing 4.8 per cent in September, after flat growth the previous month, according to latest figures released by International Enterprise (IE) Singapore on Monday (Oct 17).

Non-oil domestic exports (NODX) were hit by a decline in both electronic and non-electronic exports.

Electronic shipments fell 6.6 per cent, following a 6 per cent decline the previous month. The contraction was largely due to ICs (-6.3 per cent), disk drives (-55 per cent) and parts of PCs (-22.4 per cent), IE Singapore said.

Non-electronic exports contracted 4 per cent, in contrast to a 2.7 per cent expansion the previous month. The decline was led by structures of ships and boats (-99.9 per cent), civil engineering equipment parts (-47.6 per cent) and petrochemicals (-6.5 per cent).

Overall, shipments to seven of Singapore’s top 10 markets fell, with Malaysia, Indonesia and the US leading the decline. Bucking the trend were exports to Hong Kong, the European Union and South Korea, which rose between 9.9 per cent and 23.8 per cent.

http://www.channelnewsasia.com/news/singapore/singapore-exports-down-4-8-in-september-after-flat-growth-in/3211438.html

2 The Singapore dollar fell to a seven-month low on Friday (Oct 14), as a disappointing growth report card and a dovish policy statement from the central bank fuelled concerns over the outlook of the economy.Gross domestic product (GDP) for the third quarter grew by a slower-than-expected 0.6 percent on-year, compared with forecasts of 1.7 per cent from a Reuters poll. Economic growth also contracted 4.1 per cent on a quarter-on-quarter basis, well off expectations for 0.3 per cent growth.

http://www.channelnewsasia.com/news/business/singapore/singapore-dollar-hits-7-month-low-on-lacklustre-growth-outlook/3205948.html

————————

But fortunately Tharman, Hng Kiang and a Lee will spare us comic routines on inflation because

global food markets were likely to remain “generally well balanced” in the year ahead, as prices for most internationally traded agricultural commodities were “relatively low and stable”.

http://www.bbc.com/news/business-37573785

——————————–

3 Retail sales in Singapore fell 1.1 per cent in August compared with the previous year, with all sectors except motor vehicles in the red, according to figures released by the Department of Statistics (SingStat) on Friday (Oct 14).

http://www.channelnewsasia.com/news/singapore/retail-sales-dip-1-1-in-august-nearly-all-sectors-in-the-red/3205794.html

And this is really terrible news

4 While manufacturers have been under siege for some time on the back of flagging global trade, economists are also becoming concerned about the service sector. “The drag from (weak external demand) has now permeated into the core of the Singapore economy,” said Ms Ling.

The service sector has now logged three consecutive quarters of quarter-on-quarter contraction. The last time this happened was during the global financial crisis, said ANZ economist Ng Weiwen.

“(This reinforces) our view that tough times are here to stay for Singapore, with growth running the risk of remaining stuck in low gear,” he added.

A prolonged service sector slowdown will lead to more layoffs going into next year, given that the sector employs 72 per cent of the workforce, noted UOB economist Francis Tan. “We should be prepared for worse to come,” he added.

The only sector that logged an uptick in output in the third quarter was construction, which grew 2.5 per cent over last year.

Government forecasters expect growth to come in at the lower end of 1 per cent to 2 per cent this year.

ST

3 good signs economy is getting sicker

In Economy, Property on 04/10/2016 at 6:21 pm

Companies (facing cashflow problems?) are delaying payments. This in turn causes cashflow problems for others.

Payment performance of local firms “deteriorated strongly” year-on-year in the third quarter of 2016, said the Singapore Commercial Credit Bureau (SCCB) in data released on Monday (Oct 3).

Prompt payments declined to about 42.18 per cent of total payment transactions in the third quarter, compared to a year ago when 51.05 per cent paid their bills on time. Slow payments also rose, accounting for more than two-fifths of payment transactions in the same period.

http://www.channelnewsasia.com/news/singapore/sharp-fall-in-prompt-payment-by-local-companies-in-q3-2016/3176496.html

Residential property prices remain weakish

Singapore home prices dropped by the most in more than seven years as developers offered discounts amid signals from the government that it won’t roll back property curbs initiated in 2009.

  • Home prices fall for 12th quarter as curbs stay, dropping 1.5%
  • Residential values are down 11% from peak in September 2013

http://www.bloomberg.com/news/articles/2016-10-03/singapore-home-prices-have-biggest-drop-in-more-than-seven-years

Ho ho Ho if u bought a condo in the last few years,

But real wages keep rising

Salaries in Singapore are set to rise 4 per cent next year, compared to an average of 5.9 per cent across the Asia-Pacific region, according to a survey released on Tuesday (Oct 4).

After taking into account Singapore’s inflation forecast of 0.8 per cent, salaries in the city-state are expected to rise 3.2 per cent, the survey by professional services company Willis Towers Watson found.

http://www.channelnewsasia.com/news/singapore/salaries-in-singapore-likely-to-rise-4-next-year-survey/3178352.html

 

 

 

The truth about the loss of IT jobs

In Banks, Economy on 09/09/2016 at 6:13 am
Here’s one TRE poster that I hope doesn’t join the migration to The Idiots  — Singapore or TISG as it prefers to be known. He wrote:
Good News:

This is good news, the Indians will return to India. IT department here all belongs to Indians already, no longer a Singaporean job. We got sold out long ago.

Rating: +18 (from 20 votes)
He’s right up to a point. The IT industry here belongs to FTs from India and locals are discriminated against in the sector according to people like Gilbert Goh and TRE posters.

He was responding to a Bloomberg report carried by TRE that said Barclays intends to cut approximately 100 IT jobs here

The report said that the employees are part of the Information Technology Operations team.The IT function will be moved to India to save on costs.

Barclays has since confirmed in a statement that it is in the process of cutting jobs here saying “identified a number of additional roles that carry out global activity in Singapore which can be relocated”

As I’ve reported before, in the early noughties, the PAP administration allowed the likes of Merrill Lynch, Citi and Beutsche to import cattle truck-loads of Indian IT FTs, in return for the banks promising to set up big chunks their global back office IT ops here.

As I reported beforem one shop in Suntec City had to fold after Citi retrenched its Indian ITs during the financial crisis. The owner’s biz model was premised on Indian FT techies.

Carrefour also closed its section selling freshly made Indian food that it opened a year earlier.

These two businesses show the kind of spin-offs of having FTs here. And what happens when they leave.

In general, the benefit of FTs coming in is the money they spend on entertainment, rent etc. When they leave, this spending is lost.

S’pore: “hewers of wood and drawers of water”

In Banks, Economy on 10/08/2016 at 7:50 am

FT reports that Goldman has 62 per cent of its “strategic location” headcount in Bangalore, 22 per cent in Salt Lake City, 8 per cent in Dallas/Irving, 7 per cent in Singapore and 1 per cent in Warsaw.

We are “hewers of wood and drawers of water” for Goldie. PAP administration will say that we must thank the FTs for this. Given our world beating rankings in academic excellence, who is responsible for ensuring that we (because of the FTs) can only be “hewers of wood and drawers of water”?

The PAP administration is a reasonable answer given its claim that the rankings shows the PAP administration’s long-term planning. To be fair, in the early noughties, the  PAP administration sought to make S’pore a global hub for banks IT operations. FT Indians were let in by the cattle-truck load because Merrill Lynch, Citi and Deutsche agreed to use S’pore as  global hub. I know someone in Suntec City whose biz model depended on the FT Indians Citi employed. When Citi retrenched, he closed his biz. As did the spot in Carrefour that sold great Indian cooked food.

Blame low productivity on NS training?

In Economy on 03/08/2016 at 6:29 am

MORE than half of Singapore companies have experienced staff who are physically present but mentally absent*. BT

That’s a lot.

We learnt this camouflage technique during NS because we had no choice but to do what we were told to do. We became experts at “switching-off”; something even SAF regulars do. Remember the radar operators and the commander of a naval vessel that got rammed by an oil tanker? The courts found they were “switched-off”.

We carry this ability to “switch-off” over to civilian life even if as an ang moh expert from recruitment firm Robert Half rightly says,.employees also need to take responsibility for their satisfaction at work. “If an employee finds they have accepted inner resignation, then they should identify the cause of their dissatisfaction and raise the matter with their employer during their performance review. If the issue cannot be resolved then they are better off seeking a new job than lingering in a role they are unhappy with.

So could one reason for S’pore’s really bad productivity record be the NS training we receive to be physically present but mentally absent? We switch-off too much?

And where we did learn other harmful productivity habits like skiving and coffee breaks? NS.

But let’s not put all the blame on the PAP administration for low productivity. Another probable good reason for lousy productivity is bad management.

Economists reckon that about half the productivity gap between Britain and America is down to bad management. A paper by Nick Bloom of Stanford University and others shows that the David Brents can learn from the Jack Welches: when they take over British firms, American multinationals bring better technology and practices, lifting productivity by up to 10%.

(Economist)

Bad management is partly responsible for the “switching-off” problem :“Inner resignation is often overlooked by employers, especially in workplaces where employees are left alone to get on with their jobs,” explained senior managing director David Jones. “Employers need to be more vigilant in looking for signs that an employee is mentally disengaged, such as a lack of motivation for bonuses or advancement or a drop in productivity.”

Whatever it is, S’poreans are never at fault.

 ———————————-

*This …”inner resignation”, has been observed in 57 per cent of Singapore businesses, according to recruitment firm Robert Half.

It tends be more common in large- and medium-sized companies, with 68 per cent of companies seeing it, compared to 32 per cent of small organisations. The findings came from its survey of 100 chief financial officers and finance directors in Singapore, as part of an international workplace study.

“Inner resignation is often overlooked by employers, especially in workplaces where employees are left alone to get on with their jobs,” explained senior managing director David Jones. “Employers need to be more vigilant in looking for signs that an employee is mentally disengaged, such as a lack of motivation for bonuses or advancement or a drop in productivity.”

Tharman the Joker/ Disconnect/ Not Uniquely S’porean

In Economy on 08/07/2016 at 5:36 am

Must be joking

Singapore must respond quickly and take advantage of technologies so as to create better jobs for Singaporeans, said Deputy Prime Minister Tharman Shanmugaratnam on Monday (May 30)*.

Looks like he’s trying to tell jokes again.

So long as there is a flood of cheap FT labour for PMET tasks, why should employers bother? It’s only when labour is expensive that capital-intensive technology and processes are used: A -levels econs.

Worse, FTs can get jobs as drivers and barbers. So what’s this talk of slowing the flood of FTs?

———————–

Tharman is the Joker

Isn’t his comments on govt acting quickly on property prices, bit like his jokes on inflation, wages?

https://atans1.wordpress.com/2012/05/25/will-hougang-make-the-pap-moan-the-inflation-blues-not-joke-abt-it/

https://atans1.wordpress.com/2013/11/11/tharman-trying-to-tell-jokes-again/


Disconnect on FT numbers

Like other S’poreans, I feel that the govt’s claims of ever decreasing FT inflows doesn’t chime with reality: there is a disconnect.

I came across this report from CNA that may help to partially bridge the gap:

Another factor that may affect older workers is that their compensation packages may be higher than for younger workers with less experience, which may play a role when companies are trying to cut costs,” he added.

In particular, older Professionals, Managers, Executives, and Technicians (PMETs) have borne the brunt in terms of job losses and re-entry into employment as businesses restructure amid a slowing economy.

“It is a reflection of the economic structuring,” Credit Suisse economist Michael Wan told Channel NewsAsia. “As companies continue to cut headcount amid the economic headwinds, older PMETs continue to be retrenched.”

About 46 per cent of residents made redundant in the fourth quarter of 2015 found jobs by March, down from 50 per cent in the previous quarter – marking the lowest since June 2009.

“Amid softer economic conditions and as the economy restructures, redundancies are expected to rise in sectors affected by weak external demand,” MOM said, adding that it will continue to work closely with tripartite partners to help those laid off find jobs.

http://www.channelnewsasia.com/news/singapore/more-older-workers/2867232.html

FT PMET numbers may be down, but when FT PMETs come in, they replace older S’porean PMETs.

Not Uniquely S’porean

But falling productivity is an uniquely S’porean issue . It’s a global problem. Even if there are no FTs, there’d still be a productivity problem.

 

*At the annual Pre-University Seminar, DPM Tharman said in most advanced countries, there is a “real fear” that in 10 to 20 years from now, jobs losses will exceed the number of jobs created, resulting in higher unemployment.

“We can avoid that. First, because we have an advantage of being a small society but with a global market. And secondly, we can avoid that by responding in advance to what is coming – respond quickly to technologies, take advantage of technologies and make sure that we create better jobs for everyone,” he said. 

He added that there is a need to “use technology rather than be used by technology” – and this means using technology “to enhance human abilities in every job and to create satisfying jobs.

And limiting civil servants access to the internet is using technology

 

And govt wants to encourage fintech?/ PAP is never wrong

In Banks, Economy, Internet, Political governance, Public Administration on 22/06/2016 at 6:04 am

Is Tharman trying to tell jokes again? (Examples in the past, another recent one?). He’s the leading advocate of fintech here.

But demand for digital services leaves banks and other financial institutions more open to more risk. The majority of top bankers said they were open to more risks than they could manage as a result of digital developments, according to a global survey of bankers by the consultancy Accenture.

Yet the PAP administration has indicated by its plan to restrict direct access to the internet for civil servants that it is trying to cut cybersecurity risks by cutting internet connections.

——————————————————

Delinking cicil servants from the internet

‘The Govt’s move to delink computers used by civil servants from direct access to the Internet is “absolutely necessary” to keep govt data and public services secure,’ PM. He cited the possibility of personal data like NRIC numbers, addresses and income tax returns being hacked and put up for sale in the internet.

When this policy takes effect in May next year, civil servants can only access the Internet through dedicated computers or through their own computers. It seems that there have been very determined attacks on the Govt’s IT systems and the threats are getting more severe and sophisticated. Just relying on the system’s defensive measures is looking like a losing proposition? It is best to cut the connections to the minimum?

————————————————————-

So how does the call for more fintech dovetails with the plan to deny most civil servants direct access to the internet?

 

Fintech is all about increasing connections, the civil service delinking initiative is all about cutting connections.

Does the PAP administration think that the banks and other financial institutions can safeguard data better than it can? Or that the data financial institutions hold  is not so impotant?

Or maybe is the delinking policy, is as suggested by Chris K, aimed at avoiding a PR disaster:” PAP must always look good even when PAP goofs”? A variant of “Napoleon is always right”*?

Or is Tharman just joking about the importance of fintech to S’pore?


*Another one of Boxer’s mottoes is “I will work harder”. Sounds so S’porean and something that the PAP encourages. But then why is productivity is so worryingly low. Too many of the PAP’s favoured caste, FTs, isit?

How come HK got minimum wages but more competitive?

In Economy, Hong Kong on 12/06/2016 at 1:23 pm

Don’t PAP ministers insist that minimum wages will destroy the S’pore economy?

These tots crossed my mind when I read the headline:

Singapore Loses to Hong Kong in Race for Most Competitive

http://www.bloomberg.com/news/articles/2016-06-09/singapore-loses-to-hong-kong-in-race-for-most-competitive

But after reading the report, more nuanced tots came to mind.

One tot: S’poreans want to restrict the flow of FTs but this it seems makes S’pore less competitive.

Singapore’s stricter rules on hiring foreign labor, which adds to business costs.

“The key difference between the two territories is Singapore’s restrictions on importing foreign labor, and their policy of boosting labor costs to discourage companies from being dependent on foreign labor,” said Brian Tan, an economist at Nomura in Singapore. “When you push labor costs, that’s going to have an effect on competitiveness.”

… Hong Kong’s labor market as more competitive than in Singapore, with the China-controlled territory improving from 2015 on scores such as working hours, skill levels, unemployment legislation and immigration levels.

Hong Kong also leads Singapore on business efficiency, including productivity and here PAP administration can’t blame the plebs management practices, according to IMD.

Next, there seems to be a disconnect between what the local PMETs (and even this retiree) feel and the “experts” say: FT policy to us is not restrictive what with FTs being allowed to become drivers and barbers.

Another tot:“It’s not just the economy, stupid,” says a poster by the Brexit campaign in the UK.  And one of its charismatic leaders surely is right when he says, “We need to value people’s quality of life and standards of living and not just national GDP figures.” (But Brexit would say these rhings. The conventional economic wisdom is that the UK is doomed economically if it leaves the EU.)

Coming back to HK’s liberal FT policies: HK is Goh Meng Seng’s paradise on earth. Funny he doesn’t laud HK’s liberal immigration policies. He’s got his family there but thinks he is entitled to lecture us on the failings of the PAP. Surely the PAP in doing the popular thing (restricting FTs) is doing the wrong thing, and HK , GMS’s paradise on earth, the right thing?

Juz remember for S’poreans now:“It’s not just the economy, stupid. and”“We need to value people’s quality of life and standards of living and not just national GDP figures.”

 

Not uniquely S’porean/ Don’t shout at S’poreans

In Economy on 07/06/2016 at 4:44 pm

Wages, that don’t compensate for rising property prices  and higher cost of living i are not unique to S’pore.

Taiwan, a place where many paper warriors approve of (rightly in my view), because it has successfully made the transition to democracy, also faces a situation where graduate starting salaries, and wages generally, having stagnated for years despite sharp rises in housing and other living costs.

Likewise South Korea.

As the Economist (from a developed world perspective) put it: While the long period of sluggish growth and low rates has been good for investors, it hasn’t been that great for voters; real wages have struggled to rise.

So those trying to stir the plebs against the PAP should realise that the plebs are not stupid. Yes the PAP administration is repressing wages through the FT policy and NTUC, while keep the price of public housing higher than it should be, but

Real wages in Singapore rose 5.4 per cent last year amid negative inflation, the Ministry of Manpower (MOM) said in its annual report on wage practices on Thursday (Jun 2).

In the private sector, nominal wages grew 4 per cent in 2015, down from the 4.9 per cent increase the year before. When employer Central Provident Fund (CPF) contributions are factored in, growth in total wages remained stable at 4.9 per cent, due to the increase in employer CPF contributions last year.

http://www.channelnewsasia.com/news/singapore/real-wages-in-singapore/2838448.html

No point shouting at swing voters, try to convince them that the PAP’s trade-offs are the wrong ones.  As much as we might disagree with the PAP’s policies, the voters don’t. Ok only 70% agree with the PAP’s position. But that doesn’t mean the 30% must prevail, does it?

As the Guardian talking about Jeremy Corbyn (UK’s very own Mad Dog Chee) and Donald Trump said, both are popular phenomena poorly understood – and in both cases, just shouting at people that they’re wrong has proved spectacularly useless. Asking them why they think what they think may not change anything much. But the conversation is sure as hell overdue.

The govt had its NatCon, and look what happened.  Dr Chee wayanged his way around S’pore after GE 2015 but otherwise the oppo parties have as usual avoided talking to swing voters: in between GEs or by-elections. They leave it to the cybernuts to shout at S’poreans.


*I admit I was one of those who mocked NatCon. But it worked for the PAP didn’t it?

Why PM won’t heed Jap PM’s tots

In Economy, Japan, Property on 29/05/2016 at 1:05 pm

Foreword: Chris K (A S’porean FT living in Japan) commented on Facebook on this piece. I’ve worked his comments into the original piece and added some background info. Hence this retitled piece which is an expanded and reworked version of the earlier piece.

…  ….

Prime Minister Abe … in his latest op-ed in the WSJ says that if developed countries are facing a future of low or no growth, and shrinking populations, then perhaps governments should focus on improving living standards and not simply chase high economic growth rates.

Well as S’pore is now facing a future of low growth and a shrinking population, unless FTs are let in by the cattle-truck load, the PAP administration should focus on improving living standards and not simply chase high economic growth rates?

After all Goh Chok Tong said we should be like the Japanese. And PM and ministers cite Japanese practices: here, here and here.

But then the PAP can’t let in its beloved FTs to eat S’porans’ breakfast, lunch and dinner and all snacks in between. FTs are needed to spur S’poreans to be as cheap to hire as FTs are, despite the higher cost of housing etc here. Hard Truths are more important than the well-being of S’poreans?

Here’s what Chris K says about life in a stagnant, past its prime Japan

Lived in Japan 1990-1995 and then again from 2006, the difference between the 2 periods in my view is that it is more livable today than before despite all the “bad news” of stagnation and deflation. Working hours have steadily declined despite shortage of labour. Total Fertility Rate has gone up.

(Btw, a few yrs ago I reported that HSBC showed that Japan was doing pretty well)

Life can be good in a country with a shrinking population and deflation. The PAP juz doesn’t like stagnation, deflation and a shrinking population.

Chris K then goes on to criticise the PAP’s administration policies here. Pay attention to (and think hard about) the section beginning the entire pension and healthcare proposition have under LHL been tied to ever-increasing real estate prices …

But I completely agree with Cynical Investor, the PM won’t be heeding Abe’s advice. Why? Just 2 simple things.

First the government salaries are marked to GDP growth despite the factthat in today’s digital economy GDP is a terrible measure of progress since many improvements and convenience in life comes free (think on-line shopping vs going to shops) or below cost, thus understating the impact on GDP growth. So nuts and bolts, brick and mortar still rule their head even if they have to accept the digital challenge.


Harry and Dr Goh has things easy when  running S’pore. They grew the economy and jobs and wage rises followed.

Nowadays GDP is decoupled from jobs and wages. I wish someone would do a similar chart for S’pore.

——————————

Second, far more importantly, the entire pension and healthcare proposition have under LHL been tied to ever-increasing real estate prices (think downgrades and LBS to finance you and your parent’s healthcare and pensions). That means forget about quality of GDP growth, quantity is the game where large increases in population are required not just for those nuts and bolts, brick and mortar but with the benefit of keeping real estate prices elevated.

If you think we have a real estate bubble that may or may not be deflating, then equally we then must have a bubble in the government’s projections for our retirement and healthcare. Both are inexorably linked, one cannot exist without the other because of the use of CPF for housing. So 6.9m is a done deal, 10m a very likely eventual outcome. More foreign labour supply to hold down wages, a more crowded country, more stresses and greater wealth disparity. At some point this will stop and then this country will have an almighty day of reckoning.

Maybe PM should heed Jap PM’s tots?

In Economy on 28/05/2016 at 12:25 pm

Prime Minister Abe … in his latest op-ed in the WSJ says that if developed countries are facing a future of low or no growth, and shrinking populations, then perhaps governments should focus on improving living standards and not simply chase high economic growth rates.

Well as S’pore is now facing a future of low growth and a shrinking population, unless FTs are let in by the cattle-truck load, the PAP administration should focus on improving living standards and not simply chase high economic growth rates?

After all Goh Chok Tong said we should be like the Japanese. And PM and ministers cite Japanese practices: here, here and here.

But then the PAP can’t let in its beloved FTs to eat S’porans’ breakfast, linch and dinner and all snacks in between. FTs are needed to spur S’poreans to be as cheap to hire as FTs are, despite the higher cost of housing etc here. Hard Truths are more important than the well-being of S’poreans?

We need to attract more PRC visitors

In China, Economy, Tourism on 26/05/2016 at 2:28 pm

 

 

LKY was wrong on service jobs/ Lessons from the Foxes

In Economy on 05/05/2016 at 2:30 pm

I was recently at my barber and it reminded me that LKY was talking cock about service jobs. Many yrs ago he said that service jobs like cutting hair and waiting at tables could not be exported i.e. locals could not lose their jobs doing these things. (He was talking when the disk drive manufacturers were relocating out of S’pore, retrenching workers, and the govt was moving towards creating more service jobs. The move resulted in two casinos. A good thing in my view.)

Well the lady cutting my hair (for $6) is M’sian*. And so was the previous barber I used ($10). And it’s a fact that hair cutters  and dressers in S’pore are from M’sia.

We want services to be cheap and good, and so have to import people willing to work for peanuts (by our standards). The PAP administration is very happy to oblige us by allowing FTs to eat our breakfast, lunch dinner and supper; and all snacks in between..

And now robots will be replacing humans. So FTs will be replaced not by locals, but by robots.

Robots Day 1 chart

True it’s in the US but it’ll come here.

Now to the Foxes. They have a British core: 9 of 23 are British. Better than the core S’poreans in S’pore businesses, NTUC and MoM should note.

The club’s Thai owners, King Power, have spent little on players, but lavishly on coaching, scouting and training facilities.

Must have lessons for S’pore.


*Yes I know there are  locals who will cut hair for $6. But they tend to be druggies who not only look high but are probably high. So I prefer FTs.

Catch-22 for PMETs

In Economy, Property on 21/04/2016 at 2:22 pm

“No country becomes rich after it gets old,” warns Rodrigo Chaves, country director for the World Bank. “The rate at which you grow [with] a whole bunch of old people on your back is much lower than the rate of growth at which you can grow when people are active, are educated, are healthy.”

(FT article on Indonesia)

This is the reality be it Indonesia or S’pore or the US: population growth, not productivity growth drives economic growth. What it means is that S’pore will have problems “growing the pie” (or trickle down) if the demographic profile is not reversed.

If S’poreans who have mortgages (whether on public or private) hope to use their property to finance their retirement, they should be petitioning the PAP administration to allow FT PMETs to flood in by the cattle truck load again, not juz by the A-380 load so that there are a lot more younger people so that the economy can keep on growing.

Waz the value of that property if there’s no demand for housing when the PMETs reach 79?

But then, these S’poreans will find themselves unable to finance their mortgages because FTs steal their breakfast, lunch, dinner and supper.

What to do meh?

Well didn’t the PMETs vote for the PAP consistently. Like Harry’s daughter, they have made their bed and must lie in it.

Vote for Robin Hood anyone?

Robin Hood, Robin Hood, riding through the glen Robin Hood, Robin Hood, with his band of men

Feared by the bad, loved by the good

Robin Hood, Robin Hood, Robin Hood

 

He called the greatest archers to a tavern on the green

They vowed to help the people of the king

They handled all the troubles on the English country scene

And still found plenty of time to sing

 

Robin Hood, Robin Hood, riding through the glen

Robin Hood, Robin Hood, with his band of men

Feared by the bad, loved by the good

Robin Hood, Robin Hood, Robin Hood

After all in S’pore, the PAP is viewed as the party “Feared by the poor, loved by the rich”: think VivianB and his sneering at the elderly poor. He’d make a good sheriff of Nottingham in any movie.

But sadly, the nearest we have to a Robin Hood (Dr Chee) will be thrashed by an Indian lawyer in the coming Bukit Batok by-election.

Wny no need for S$ appreciation

In Currencies, Economy on 19/04/2016 at 6:16 am

S$ up 6% against US$. LOL

Be afraid, very afraid/ PAP doomed, like USSR commies?

In Currencies, Economy on 18/04/2016 at 2:52 pm

S’pore is facing serious economic problems. And who knows, it could lead to political change?

—————————————————-

Going the way of the USSR?

Recently Chris K posted on Facebook It was when the mobilisation of labour and capital have completely ran its course [in the USSR] that the troubles of the 1980s began. In this Singapore is also following the same path. Th PAP says they know this has to change but the flesh is weak even if the spirit is willing.

(Related post: http://utwt.blogspot.sg/2012/02/myth-of-paps-miracle-paul-krugman.html)

The logical conclusion of this view is that the PAP like the the Soviet Communist Party is doomed.  Question of time.

Os the 2015 GE, the high water mark for the PAP? Could the Lee row be an omen?

Where Chris K and I agree is that if property prices fall 20%, it’s bye-bye PAP.

————————————————————

Did you know that the last time MAS  adopted a flat stance on the currency was in 2009 in  a recession. We not yet in recession so the move is pre-emptive. But this means the govt is afraid, very afraid.

Until now, the central bank had adopted a policy of what it had called a “modest and gradual appreciation” of the currency. Keeping the Singapore dollar flat is a move previously associated with recessions: significantly, the MAS last took this position in the middle of the global financial crisis in October 2008.

On the face of it, Singapore has no immediate reason for concern. Its fiscal surplus and low unemployment make it seem an economic paradise to policymakers elsewhere. Nevertheless, the man on the street has been experiencing deflation for several months now, a predicament not unfamiliar in other parts of the developed world. In February, the government forecast that prices would range from flat to down 1 percent this year. The central bank’s preferred measure of inflation, which excludes rent and transport costs, remains below 2 percent.

Singapore is also showing signs of stress. On a seasonally adjusted basis, the economy did not grow at all in the first quarter compared with the final three months of last year. Though manufacturing output rose after six consecutive quarters of contraction, this was due to a temporary increase in pharmaceutical production. In the dominant services sector, economic activity shrank by 3.8 percent from the fourth quarter of last year.

With the stock market in the doldrums and property prices falling, local bank DBS predicts growth of just 1.5 per cent this year, and says a downward revision could be on the cards. For all the outward calm, Singapore has plenty to worry about.

http://blogs.reuters.com/breakingviews/2016/04/14/singapore-joins-global-battle-against-deflation/

Priductivity: What our masses not told

In Economy on 03/04/2016 at 12:09 pm

But first the Economist reports that a new paper shows that a higher minimum wage may not be as effective in tackling poverty as many hope. Low-wage workers don’t all belong to low-income families. I’m sure the PAP administration and its running dogs* in the constructive, nation-building media and academia will tell NTUC members, PMETs and other S’poreans this.

But NTUC members, PMETs and other S’poreans won’t hear from them that

— An impact of higher minimum wages is higher productivity.

Still there are other potential impacts of higher minimum wages;one is higher productivity. Some British companies that voluntarily shifted to a higher living wage found that staff absenteeism and turnover rates reduced, and productivity improved. It is hard to disentangle cause and effect here; are better-paid staff better motivated or are employers forced to become more efficient to absorb the cost of higher wages?

So if Tharman wants to improve productivity, as he says he wants** to, he should have minimum wages and set them high.

— One possible explanation why productivity has not been increased by new technology could be the sluggishness of wage growth; labour is so cheap that employers have less incentive to replace it with capital. Think the PAP’s administration very liberal FT policy both in numbers and quality: T often stood for “Trash”. Think SGX.

The main function of liberal FT immigration policies is wage repression. Why employ a local if FT is 20% cheaper (OK, I exaggerate because levies are paid, but still cheaper.)

————————————

How FTs affect the wages of the young here and their productivity

This conversation appeared on Facebook

Jeraldine Phneah

I think it is simply unfair to ask Singaporean youths to accept lower pay for PMET positions like their counterparts from developing countries working here are doing i.e. Filipinos, Vietnamese and Malaysians. Some believe that we should do so to ‘remain competitive’ and if we don’t, we are ‘entitled and lazy’.

I think it is unfair to compare our youths with those from other countries. They are earning a lot more here than they would at home due to our exchange rate . When they return, they will be very rich. In contrast, Singaporeans need more money to buy a house here, afford necessities and save up for retirement here.

While I think Singaporeans should not accept lower pay, I am not in any way saying that Singaporeans should earn more than foreigners. I think both should earn equally good pay.

A first world economy where businesses survive largely because wages are kept low is simply unsustainable.

It elicited this response from a tua kee: Yeoh Lam Kong (Once GIC’s chief economist. he’s now in Harry’s School of Public Policy)

Agreed!

It also disincentivises firms from upgrading to higher skilled, more sophisticated operations needing experienced, high level staff as well as lowers the return in engineering or computer science vocations so that local grads have less incentive to take these key subjects at university or as a profession, lowering the supply of locally trained engineering graduates.

So not only is this unfair to Singaporean youth; it also likely retards our manpower and industrial development as well as comparative advantage in key sectors longer term.

Another lady added:

Thank you Jeraldine for expressing so well what I always wanted to say on the “foreign talent” working in Spore. It very true that we are not entitled n lazy.

It very true that till there are control over the lax rule on S n employment pass, co had no incentive to automate as the easy way is simply to hire cheaper FT.

The civil servants post should be open to these FT so that our spoiled n well sheltered civil servant had a taste of their lax altitude to easy approval of FT S n employment pass.

Btw, wondering why the cybernuts from TRELand like Dosh, Oxygen, Ng Cock Lim and Philip Ang are incapable of discoursing like this? No wonder Richard Wan (ex scholar) and Chris K have moved on out of TRELand and associate themselves with TOC.

———————————

— And maybe Higher minimum wages could stimulate the economy and boost wages, for example. Or if employers focus on high-skilled workers in the short term, that could boost productivity and the economy in the long term, eventually providing jobs for the low skilled. 

(All quotes from: http://www.economist.com/blogs/buttonwood/2016/04/minimum-wages)

Yet despite all this wage repression, the Oppo parties not could win more than 30% of the popular vote and in many wards had only the “THe PAP is always wrong” voters voting for them.

S’poreans daft? No: article on how the oil price collapse in 2014 helped the PAP

———–

*Apologies to the real dogs. Blame Mao for using the term to denote rats and other vermin who take human form.. apparently he didn’t like dogs.

**On Friday Tharman sais Data shows that outward-oriented sectors such as logistics and manufacturing saw productivity growth of 3.2 per cent each year over the last five years. However in domestically-oriented sectors, such as retail and F&B, productivity has fallen by about 0.6 per cent each year in the last three years. 

DPM Tharman said that there is a need to close this gap as it can help to ensure income growth for Singapore over the long term. 

He added that lessons from the most innovative firms should be shared with other companies and the focus will be on developing more breakthroughs, deeper innovations and more disruptors. This could see some firms having to exit to make space for the most innovative players. (CNA)

Israeli policy shows up PAP govt

In Economy on 29/03/2016 at 10:05 am

Because Israel puts strict limits on hiring skilled non-Jewish foreign workers, tech companies find it easier to recruit in the under-tapped minority Arab and ultra-Orthodox communities. (FT)

Well here, the immigration policy here is still lax enough for employers to prefer FTs because they come wothout the 17% CPF contribution (the imposts on using FT is less than this) ….

Ong Teng Cheong & the Budget

In Economy, GIC on 27/03/2016 at 2:31 pm

Sometime back I said that I would blog in greater detail about Ong Teng Cheong’s unhealthy obsession about locking up the reserves. This is as good a time as any to write about the matter because of the Budget and because recently I read this: http://singaporedaily.net/2016/02/11/daily-sg-11-feb-2016/ which left out not so friendly details about the People’s President.

Ong Teng Cheong wanted to lock-up reserves forever and a day. He wanted future generations to press their noses at the blast-proof windows protecting the reserves. They would be able salivate at the reserves but despite their distended, empty bellies, not able to have access to the reserves until the president gave access.

He made this very, very clear when as DPM, he didn’t want any of the interest or capital gains from the reserves to be used by the govt of the day. He wanted the constitution changed for these to locked-up too arguing that the value of the reserves must be preserved. The only way of doing this was to lock up the interest and capital gains. Taz the People’s President for you.

It was one Ah Loong that wanted a more flexible regime of using the returns for the present generations. Ah Loong, of course, got his way and the over the years more and interest and capital gains have been allowed to be used.  The returns on the reserves are being used as an endowment, with the Budget as the immediate beneficiary.

————————-

Related article: The theory and practice of an endowment fund

http://www.theguardian.com/business/2015/jan/01/wellcome-trust-investment-chief-plays-long-game

“I think is predominately a mindset,” says Truell*. “It is a mindset that believes that compounding cash flows over time is the most effective form of investment. It is partly also the mindset of the organisation. I have a board that consists mainly of very eminent scientists who are very empathetic to the view that you make progress over years and decades, not over the next quarter.” Truell is CIO of the Wellcome Trust

——————————————————

This yr, the net investment returns contribution, S$14.7 billion, means that overall Budget position is  S$3.45 billion “surplus”*, amounting to 0.8% of nominal GDP. Economists say this overall surplus position will give the Government the fiscal space to enact off-Budget measures, should the economic outlook deteriorate significantly.

“Without the contributions from GIC and Temasek, there would have been a primary deficit* of almost S$5 billion. This is bigger than the S$2.3 billion deficit* in the post-financial crisis Budget in 2009, and the S$4.25 billion deficit* last year,” said Mr Ng. (CNA)

(*As defined by the S’pore govt, not the IMF. By IMF standards, S’pore’s surpluses from its Budgets amounting to 7% of GDP: not peanuts.)

Net investment returns contribution over the years. (Source: Ministry of Finance; Infographic: Linette Lim) CNA

All these monies would have been denied to S’poreans by the People’s President. No wonder the nuts in TRELand adore and worship him: he’d have screwed their handworking fellow S’poreans.

Finally, readers may be interested in these excerpts about GIC’s mgt of the reserves from a Bloomberg article that appeared in 2014

GIC has moved away from the endowment model of strategic asset allocation it had followed for a decade. In the process, it’s become one of the world’s most aggressive sovereign wealth funds.

As the new strategy came into effect in April 2013, GIC shifted away from its traditional asset-allocation strategy to a more active approach. Its fund managers can now deviate from GIC’s portfolio if there’s an opportunity to beat the market.

“The way of generating returns through holding diversified assets and just kind of waiting would not work well anymore,” CIO Lim says.

In GIC’s early years, the government ran it as a rainy-day fund.

“My cardinal objective for GIC was not to maximize returns but to protect the value of our savings and earn a fair return on capital,” Lee said on the occasion of GIC’s 25th anniversary in 2006.

Five years later, on GIC’s 30th anniversary, in his last public speech as GIC chairman, Lee urged the fund to take bold, strategic and forward-looking decisions.

“As GIC grows larger and more established, the impetus to follow conventional practices will grow stronger,” he said at an anniversary dinner. “This could lead to mediocrity.”

In 2012, GIC began a major review of its investment strategy — only the second such examination since the fund’s inception.

http://www.bloomberg.com/news/articles/2014-12-08/singapore-sovereign-fund-bets-big-on-trophy-real-estate

 

 

 

 

 

S’pore expensive only for expats

In Economy on 22/03/2016 at 4:16 pm

A Facebook friend (no supporter of Mad Dog Chee or WP) has had it with the views of the PAP administration, its alliies in the constructive, nation-building media and various assotrted PAPPy vermin on Facebook spinning to us that life is cheap for S’poreans here, esp when it comes to food and public tpt and “affordable” housing.

They were responding to the EIU’s survey that S’pore was the most expensive city for expats three yrs in a row: http://www.economist.com/blogs/graphicdetail/2016/03/daily-chart-4

My FB pal grumbled:

I don’t see why must Singaporeans be happy with daily meals of little nutritional value* like lots of simple carbs in white rice, a tiny amount of meat or fish and some vegetables.

Even Asian diets can be have more nutrition like cut down on the simple carbs unless you work in a menial job and add more fruits and vegetables and lean meat.

All these healthier choice will be more costly even if eat at coffeeshop or buy from NTUC and not fine dining or buy from gourmet grocers.

EIU overexagerate the costs of living, even expats eat and live healthy.

While the local media and the Prime Minister Office’s DOS [ I think he means the Department of Statistics] under estimates the cost of living using lowest baseline instead of median expenses.

Our forefathers worked hard so we can have a better life and we continue to work hard so our children can continue to progress.

Please don’t bullshit and tell me I have to work extra hard so that the landlords can huat on rental while my children have to eat less healthier and less nutritious food which affect them vs their peers who are feed better. (not more which leads to obesity)

Someone else added: U should add “Ordinary S’poreans cannot own cars isit?” Only expats and elites can isit?

I agree with them. The PAP administration want us all to live in affordable HDB flats, don’t drive cars, take public transport only and only eat rice, cheap vegerables and cheap cuts of meet. Err what about ministers?

—-

*One PAPpy lady was trying hard to explain that if we eat simple, cheap food, S’pore is a “cheap” city to live in.

S’pore: Back to 2008/2009 growth?

In Economy on 15/03/2016 at 7:31 am

DBS, and Credit Suisse have cut S’pore’s GDP) growth forecast or 2016.

——————————–

GDP growth and debts

Any country with a serious debt problem cannot afford the risk of letting GDP fall. For us and the Japa that problem is not acute because of low interest rates and because ownself own self.

But running deficits is not an option when high interest rates mean the cost of servicing government debt is prohibitive. Think Brazil.

———————————————

According to DBS forecasts released on Mar 11, the bank cut its GDP growth forecast for the country to 1.5% for the year, down from an earlier projection of 2.1%.  That’s a whooping change.

This will be the slowest pace of expansion since the global financial crisis in 2008/09.

Credit Suisse now expects GDP to come in at 1.7% this year, down from its earlier forecast of 1.9%.

DBS said the manufacturing sector is in recession and the outlook is not improving. Electronics, is facing a cyclical downturn, while the oil and gas-related sector, which is undergoing a “drastic consolidation”.

Services such as banking could slow down as well, noting that loans growth fell year-on-year in January. Financial services had accounted for about 34% of overall GDP growth in the last three years. Ftr, the economy expanded by 2.0 per cent in 2015.

And this guy who was one of the few leading economistss who waened of the 2008/2009 crisis is more gloomy than most of the world’s prospects in 2016 http://www.investopedia.com/articles/investing/031016/economist-roubini-sees-trouble-ahead.asp?article=1&utm_campaign=www.investopedia.com&utm_source=news-to-use&utm_term=6270104&utm_medium=email

 

IT: FTs verseus locals

In Economy on 08/03/2016 at 2:44 pm

Talking about the infocomm industry Communications and Information Minister Yaacob Ibrahim on Friday (Mar 4) said the industrt needs to fill as many as 30,000 new positions by 2020. He said “some companies today still want to recruit only university graduates. We know from assessments that our polytechnic graduates can hold their own against university graduates when they are judged by competencies, not qualifications. Companies who ignore this will miss out on a well-qualified pool of talent.”

The part about employing poly grads and not grads sounds sick in the light of what a reader responding to this (on the terrible prospects of getting a job in our neighbourhood) said

Singapore is really a city paved with gold for foreigners with degrees but coming from smaller cities and towns. My job sometimes involves overseas mass recruitment and interview exercises (largely paid for by S’pore tax payers, haha). These foreigner profiles typically get imported into Singapore on S-Pass getting about $2,300-$2,500 per month. Essentially these foreigners are direct competition against local fresh diploma grads or even the lousier degree holders e.g. private uni, or lousy grades etc.

Comparing the pay of most of these foreign graduates in their home towns, the $2,300 they’re getting here is equivalent to at least 1 year’s pay in their home towns/smaller cities.

Imagine your monthly salary is $100K or whatever your annual remuneration is, and you get some idea of what motivates these foreigners.

Well so long as employers can recruit FT grads why will they bother about local diploma holders and inexperienced local grads?

But Yaacob also said the infocomm talent pool can be grown through skills conversion and upgrading*, and that companies must look beyond the traditional sources of manpower.

Could the bit I bolded be a code to employers: No more FT Indians? A few years ago, a social activist who works in the IT sector told me that until the 1998 regional crisis, local PMETs in this industry had a great time because there was little competition from FTs: govt was strict on employment passes. Then, the govt allowed in FTs (primarily from India) to help companies cut costs and also to encourage banks to set-uop their regional, global back-office hubds here.

That he said screwed our locals.

So could the govt really be reversing this “FTs first and foremost” policy? What do you think?

——

*He said:

— the Government will also introduce new programmes in April to help the industry; and

—  there is a need for companies to review their HR (human resources) to meet the needs for the future.

 

Grass is greener here for Asean FTs?

In Economy, Indonesia, Malaysia, Vietnam on 05/03/2016 at 9:53 am

Look at the ptoblems they have getting jobs ar home.

S’poeans will love this

In Economy, Uncategorized on 02/03/2016 at 9:06 am

If rates go so low as to become negative, borrowers are actually paid to go into debt.  If, for example, SIBOR becomes sufficiently negative, it is certainly possible that mortgages could eventually carry negative yields as well. This is bound to hurt profitability for lenders; however, they could still earn a credit spread if the bank borrows from the central bank. For example, the bank could take out a central bank loan at -4% on a mortgage issued at -1%. Here, the “borrower” is still credited 1%, but the bank is able to lock in a 3-point spread.

Read more: Negative Interest Rates: 4 Unintended Consequences | Investopedia http://www.investopedia.com/articles/investing/022616/negative-interest-rates-4-unintended-consequences.asp#ixzz41hd2vl1o
Follow us: Investopedia on Facebook

Related post: Mortgaged to our eyebrows

Double confirm, Ah Loong is lucky

In Economy on 24/02/2016 at 3:56 pm

Oil prices collapsed at the right time.

Here I pointed out how lucky Ah Loong was in calling a GE in 2015 before the global economy took a turn for the worse. Here’s another example of his luck.

Recently, while searching my online archives for some historical data, I came across a note to self that I wrote in very late 2014 referencing a piece in the constructive, nation-building media that reported the slow growth in wages since 2011. I commented to self on how this slow growth in real wages would affect the elections in 2015 (Remember by then I had predicted a  GE in 2015.). Nominal wage growth barely compensated for the growth in inflation. Inflation was a problem.

I tot that the slow real wage growth since 2011 reported in the article would mean that it would not be possible for the PAP to win big in coming GE.

But were the economists (they are still employed in the banks today) quoted in the report wrong, very wrong because in 2015:

The median Singaporean worker has seen “significant real income growth” in the last five years – a “really quite unusual” performance when most other countries have seen little or even negative income growth, said Deputy Prime Minister Tharman Shanmugaratnam.

Since 2010, after the global financial crisis, the median household income in Singapore has grown by 18 per cent in real terms – that is, after adjusting for the increase in the cost of living, he noted at a walkabout at Taman Jurong on Sunday (Sep 3) evening.

“We’ve seen very unusual sustained income growth in real terms, not just for the people at the top, but for the middle class – and in fact, the households in the low-income group have seen slightly faster real income growth than those in the middle,” he said. (CNA)

(I assume he was using the data summarised here.) Note this was said days before the GE.

— The bi-annual survey compiled by Towers Watson’s Data Services Practice also revealed that in real terms, salaries in Singapore will rise 4.4 per cent. The salary increase budget for 2016 is expected to increase 4.5 per cent, according to the survey. (CNA in May 2015).

The collapse in inflation in 2014 and 2015 due to the collapse in oil prices starting in October 2014 changed everything when it came to real wages because even if wage increases were “peanuts”, the collapse in inflation would ensure that wages went up in real terms. And the nominal increase in wages were not “peanuts”: The total wage increase in 2014 stemmed from a basic wage gain of 4.9% in 2014 (a slight decrease from 5.1% in 2013), while bonuses remained unchanged at 2.21 months of basic wages in 2014. (NWC Guidelines 2015/ 2016 published in May 2015)

If anyone is interested, here’s my note to self (Explanation: The Italic bits are the original article which paints a really gloom picture of real wages (remember oil prices had started falling only three months earlier in October 2014). The words in normal font were my comments at the time:

Why not possible for PAP to win early elections big

The PAP is deluded if thinks can win big in an early election. Real wage growth has been slow, really slow.

It’s not the usual suspects raising the issue but the constructive, nation-building media allied to the PAP administration.

For those who have placed the blame for slow wage growth squarely on cheap imported labour, this year’s headline figures in manpower would have been sobering  Despite sharp pullbacks in manpower inflows in the past few years – to the extent that the percentage of vacancies being filled by Singaporeans rather than foreigners this year hit its highest level since 2011 [Can believe Mom’s data meh?].- average pay cheques, after adjusting for inflation, grew by only 0.4 per cent amid tight labour market conditions.

And if Singapore’s struggles with boosting productivity persist, the picture on the wage growth front next year is unlikely to be any rosier, said economists, especially given the poor global economic outlook. The impending cessation of the Wage Credit Scheme (WCS), which subsidises firms for pay raises, will add another chokehold …

The reality

“Companies don’t want their margin to be squeezed. They want to save more, hold on to a profit margin, to prepare for the next year when there’s no more WCS,” said UOB economist Francis Tan. “Once you increase the wages, it will be hard to move them down again. And if the workers are still not as productive as you want them to be, it can be quite dangerous for the existence of the company.”

Labour productivity contracted 0.8 per cent year-on-year in the third quarter, worse than the 0.3 per cent fall in the first half, figures from the Ministry of Manpower showed. The first half of last year registered a 1.3 per cent decline, but this improved to 0.8 per cent growth in the second half.

Why productivity matters [Update in 2016: Still matters, low inflation not withstanding]

The repercussions of flagging productivity, as the International Monetary Fund (IMF) has warned, could extend to the whole of the Republic’s economy. With the tightening of the tap on foreign workers pushing up wages more quickly than productivity, not only will firms pass on the higher costs to consumers, but Singapore’s potential growth and competitiveness could also suffer a blow, the IMF said.

FTs needed

DBS economist Irvin Seah noted: “Businesses are unable to pursue more orders because of this labour crunch. This will also prevent them from increasing their top-line, unless the productivity of the existing manpower is able to improve.”

Besides sluggish productivity growth, OCBC’s Ms Selena Ling said companies face pressure from higher rental costs. Singapore is expected to top the rental forecast for Asia-Pacific cities, with a 25 per cent increase in office rents from this year to 2019, based on a report from property consultancy Knight Frank in September.

In adjusting to these costs, business will take into account the differing flexibility of the various types of business costs. Between rental and wage costs, wages provide a “little bit more room for negotiation”, said Ms Ling.

Agreeing, Mr Tan said many companies have been moving towards higher variable components in wages to help buffer against economic cycles.

Workers who benefit from WCS – those earning below S$4,000 – are not considered as vulnerable as low-wage workers. But given the modest growth prospects next year, some economists speculate that the Government could extend the scheme.

“At this moment, it looks like the United States is showing signs of much more broad-based sustained recovery, while the rest of the world is in different stages of recovery and slowdown,” noted CIMB Research economist Song Seng Wun.

Mr Seah, however, noted that the WCS, which represents a form of government transfer, was never meant to last and that the more sustainable approach to boost workers’ pay is to equip them with the right skills.

PAP returns to its roots

“Although I think our fiscal policies are gradually becoming more socialistic in nature, I think the Government has continued to emphasise the need for self-sufficiency and the notion of meritocracy,” he said. “I think such principles should continue to remain the hallmark of our economic policies.”

Employers kanna pay and pay

Indeed, firms have had no choice but to paymore in the stretched labour market, which workers have been quick to capitalise on.

“And it’s not just the blue-collar workers, but the senior and middle management too,” said RecruitPlus Consulting’s managing director, Mr Adrian Tan.

But inflation is rising too, so no real wage growth/ Growth/ What growrh?

Mr Erman Tan, president of the Singapore Human Resources Institute, added that firms will face pressure to keep wage growth at least on a par with inflation. Core inflation, which indicates the rise in everyday out-of-pocket costs, has been estimated at 2 to 3 per cent next year, higher than the 2 to 2.5 per cent expected this year.

“Inflation is still putting pressure on staff. Firms have to make sure staff have the peace of mind to work, so you can change work procedures, change mindsets and invest in automation, leading to improvement in productivity,” he said.

in the push for wages to grow because of productivity improvement. In September, the cleaning industry became the first to adopt a skill-wage ladder as a criterion to secure licensing, representing a breakthrough in lifting the pay of a group of workers who have seen their income stagnate. The Progressive Wage Model was also announced for security guards and will be implemented in 2016.

Consumer confidence lower than global average

In Economy on 20/02/2016 at 3:04 pm

CNA report in early February:

Consumer confidence in the Republic turned pessimistic in the fourth quarter of 2015, according to the results from the Nielsen Global Survey of Consumer Confidence and Spending released on Tuesday (Feb 2). Singaporeans also remained among the top savers and investors in the world, the survey found.

..,Nielsen said that the Singapore Consumer Confidence Index for the fourth quarter has dropped to 94, lower than the global average of 97. According to Nielsen, consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

For the third quarter of 2015, Singapore scored 101. That placed Singapore as the 12th-most confident in the world, compared to 22nd in the fourth quarter. Globally, India’s consumers were the most confident in the fourth quarter, the same ranking it held in the previous quarter.

The Nielsen Consumer Confidence Index measures perceptions of local job prospects, personal finances and immediate spending intentions, among more than 30,000 respondents with Internet access in 61 countries, it said. A total of 500 respondents were from Singapore.

“As tepid global demand continued to influence a weaker manufacturing sector in Q4 2015 and an expected modest economic growth in 2015, Singaporeans have adopted a cautionary approach in their spending,” said Ms Joan Koh, Managing Director, Singapore and Malaysia, Nielsen. “Singaporeans have also demonstrated a keen prudence for financial security and protection as savings and investments continued to be a priority over the last few quarters.”

JOB SECURITY THE TOP CONCERN

… 40 per cent of those surveyed in Singapore felt that the country was in recession, compared to 30 per cent in the previous quarter. Of those surveyed, job security (30 per cent) and the economy (30 per cent) were the top concerns, followed by work/life balance at 20 per cent.

… 62 per cent of consumers said they have cut down on shopping for new clothes, and 50 per cent said they have reduced holidays or short breaks.

Even if the economic situation improves, 36 per cent of those surveyed said they will continue spending less on new clothes, while 29 per cent said they will try to save on gas and electricity and 27 per cent said they will cut down on out-of-home entertainment.

 

Perspective on S’poreans’ Debt, Leverage

In Economy, Financial competency on 13/02/2016 at 2:45 pm

PAPpies will say no worries, as assets cover debts. But that sounds like what the highly leveraged tycoons said before 1997, 2008 and the credit crunches in the 60s, and 70s and 80s.

And in a deflationary world, the notion of “safe as houses” doesn’t work as an investment thesis. You will pay and pay while the property value depreciates.

Update on 16 Feb at 7’ooam: Debt is eternal.

S’pore’s a distant third but pips Bangkok

In Economy, Tourism on 08/02/2016 at 2:34 pm

KL’s a distant 10th

http://www.weforum.org/agenda/2016/02/which-are-the-world-s-most-visited-cities?utm_content=buffer779b3&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

 

Windows 10 to rescue S’pore?

In Economy on 04/02/2016 at 5:42 am

Manufacturing activity in the Republic contracted for the seventh straight month in January amid a decline in new orders, a drop in factory output and lower employment.

The latest Purchasing Managers’ Index (PMI) reading released on Tuesday (Feb 2) came in at 49.0, down from the December 2015 reading of 49.5. A reading above 50 means that the manufacturing economy is generally expanding, while a reading below 50 indicates contraction, according to the Singapore Institute of Purchasing & Materials Management (SIPMM),

Manufacturing activity in the electronics sector also contracted for the seventh straight month in January, with the PMI coming in at 48.5, down from 48.9 in December. The drop was due to a continued decline in new orders, factory output as well as employment in the sector, said SIPMM.

Inventory for the electronics sector expanded, due to faster deliveries from electronics suppliers. However, new export orders continued to contract for the 12th consecutive month, and this affected the supporting industry and dragged down the overall manufacturing economy, said SIPMM.

(CNA)

IDC, a research firm said PC sales should improve later this year as companies that had delayed replacing computers ahead of the release of Windows 10 last summer start buying again. This should help us as we are part of the PC galactic empire, not the Apple or Android universes. Explanation

Last yr was another yr to forget according to IDC

Worldwide PC shipments totaled 71.9 million units in the fourth quarter of 2015 (4Q15), a year-on-year decline of -10.6%, according to the International Data Corporation (IDC ) Worldwide Quarterly PC Tracker . Although total shipments were in line with already conservative expectations, the news nonetheless ended 2015 as the first year below 300 million units since 2008. The holiday quarter achieved a modest uptick compared to the third quarter, but the year-on-year decline in 2015 shipments was nevertheless the largest in history, surpassing the decline of -9.8% in 2013.

The PC market continued to face persistent challenges from longer-PC lifecycles and competition from mobile phones and tablets, despite the slowing growth in those markets.

 

Can S’poreans take a 37% pay cut?

In CPF, Economy on 12/01/2016 at 1:27 pm

And still willingly vote for the PAP? I doubt it.

But first, Trump, Le Pen and American and European “fascists” say some cultures  are hostile to Western culture and values.  While they are not exemplars of the best of Western culture and civilisation (I’ll readily admit that I’m an admirer of much of the values of the West). there is evidence that supports their views.

1.Two men from the Middle East who came to the US as refugees have been charged with supporting terrorism.

http://www.bbc.com/news/world-us-canada-35264932

2.Then there are the attacks on women in Cologne where the assailants were of African and Middle Eastern origin.

Even the UK’s Guardian (“White establishment always wrong, terrorists often got right on their side”) is forced to say: A statement issued by Cologne police on Saturday night said the number of reported cases of violence had risen substantially to 379 – 40% of them involving sexual assault. Police earlier said 31 people had been identified as being involved in the violence, of whom 18 were asylum seekers suspected of crimes ranging from theft to assault. None of the asylum seekers was suspected of committing sexual assaults.

Times: Migrants ‘planned sex attacks’ in Cologne

And

It took the better part of a week to acknowledge that asylum seekers were among the suspects.

The police certainly knew the reality of who had been on the streets. On the night some young men had shown police their asylum documents.

An internal police report describes a man telling the police: “I am Syrian. You have to treat me kindly. Mrs Merkel invited me”. (BBC report)

3. BBC reports that In Germany Although the figures are not up to date, it does not appear so far that the crime rate among asylum seekers is higher than among similar groups in the native population.

In S’pore, while we don’t have the problems that the Eurpeans have with immigrants (luckily because look at the way the Little India riot was handled), we do have a problem in that 37% of a S’porean’s wages are locked away to be spent only in ways the PAP administrations think are the “right” ways to spend our money

This means an FT can price himself 37% below a local and still achieve the same take home pay*. He can see S’pore as a place to come and work for a few yrs, and then go home, a rich man, or move to a real first world country.

—————————–

*Yes, Yes I know CPF money is employee’s money but with all the restrictions, doesn’t feel like that does it?

And OK there are govt levies etc on emploters employing FTs but do they add up to 37%? I doubt it. If anyone knows anyone in HR pls ask for me. As I understand it, employing FTs is always cheaper.

———————–

Until this issue of income disparity is addressed by the govt (only after the majority of the S’porean public realise that the locking away of 37% of an employee’s income is problematic for S’poreans and S’pore), all the govt’s measures to “tighten” inflows of PMET FTs, or measures to help S’poreans compete is just so muck sticking plaster or worse wayang. http://www.theonlinecitizen.com/2016/01/skillsfuture-credit-scheme-may-end-up-a-disappointment/

How likely do you think he will be able to get this job with a good pay after finishing his SkillsFuture Credit course on web design?

… the main purpose of Jobs Bank is to mandate employers who want to recruit foreigners on EP to advertise on it for Singaporeans first. But it does not necessary guarantee that Singaporeans will be employed. This is explained on MOM’s website:

Before you submit Employment Pass (EP) applications, you must advertise the job vacancies on theJobs Bank administered by the Singapore Workforce Development Agency (WDA).

Also, do take note that there is no quota imposed on hiring foreigners on EP currently.

So, after 6 months of non-success in trying to find his dream web designer job, Mr Zulkipli simply gives up. The next thing he may be asking himself is, what is the use of this SkillsFuture Credit Scheme?

I’ll end with this good point on not being Politically Correct, something people like Trump, Le Pen, and our home-grown wannabe s pride themselves on being.

 

It is often a code to want to be nasty to women and minorities. Right my kaleng, mat and ah quah friends? There’s a place, in moderation, of being PC.

S can fall 30% more?

In China, Currencies, Economy on 12/01/2016 at 4:41 am

chart: Asia currencies

From NYT’s Dealbook

China’s decision to push the value of its currency lower has opened a new front of worry for global investors: a potential wave of currency devaluations among the so-called Asian tigers — South Korea, Singapore and Taiwan.

Such an outcome, a number of foreign exchange specialists say, would put a further damper on global growth expectations, which already are being revised downward as China’s once-booming economy retrenches.

The dollar’s strong run recently — together with the plunge in the price of oil and other commodities — has damaged fragile emerging-market economies like Brazil, Turkey and South Africa; the dollar has risen 130 percent against the Brazilian real and the South African rand since mid-2011.

The currencies of fast-growing Asian countries, including India, have largely been insulated, thanks to their better-performing economies and their ability to stockpile large foreign currency reserve positions.

… countries have some of the most overvalued exchange rates on the planet,” said Julian Brigden of Macro Intelligence 2 Partners, an independent research firm based in Vail, Colo., that advises large money management firms on global investment themes.

When economies have high exchange rates, their exports tend to lose market share compared with countries with cheaper currencies. And when that happens, countries that depend on foreign trade will frequently take steps to push their currencies lower.

But having a strong currency at a time when manufacturing competitors like Japan and China have weaker currencies leads to a sharp fall in exports, which have been the economic lifeblood of these countries for decades.

Already, global money managers have begun to pull money out of some of these Asian markets.

The Korean won and the Singapore dollar are down 5 percent, while the Taiwan dollar has lost 7 percent over the last six months. Even in India, perhaps the most popular emerging market among global investors, the currency has given ground, about 7 percent, against the United States dollar.

..

“I expect these currencies to fall by another 20 or 30 percent,” said Raoul Pal, an independent financial analyst and the founder of Real Vision TV, a media venture where sophisticated investors discuss their views on the market. “These export figures are a big deal — it’s a huge shrinkage in the dollar-based economy, as not enough people are buying goods.”

For quite some time, Mr. Pal has been promoting an investment thesis that the relentless rise of the dollar — since mid-2011, the dollar is up 35 percent against a broad basket of currencies — will have a deflationary effect on the global economy as export-driven economies enter into a series of competitive devaluations to protect crucial export sectors.

“This is not just a commodity story,” he said. “It’s a global trade story.”

Exchange-rate volatility in this part of the world will not take the heat off other weak currencies. In addition to usual examples like Turkey, Brazil and South Africa, investors expect commodity exporters like Indonesia, Chile and Colombia to take a big hit, as the prices for their products continue to fall.

The final frontier in this respect would be the pegged currencies in the Middle East, especially the Saudi Arabian riyal, which is tightly linked to the dollar.

The other problem with downward trending currencies in South Korea, Taiwan and Singapore is that these countries, like just about all emerging market economies, have taken advantage of a rock-bottom interest rate environment to issue billions of dollars in dollar-denominated corporate debt to finance capital investments.

Foreign investors were attracted to the high yields and especially the stable currencies and bought them in huge quantities. Now, with the currencies starting to wobble, dollar-based investors have less incentive to hold on to them, and they will do what they have been doing with their Brazilian, Turkish and South African bonds — get rid of them as quickly as possible.

“There is a lot of underlying investor exposure in these markets,” said Mr. Brigden, the independent research analyst. “I think if things continue to get worse, we are going to move to liquidation stage.”

Buffett and us got bad golden anniversaries

In Economy on 01/01/2016 at 3:51 pm

Singapore’s economy is projected to have expanded 2% in 2015, making it the slowest pace of growth in six years. Mkt was down 15%, worst in SE Asia. And Indonesia and M’sia have been  the pits. Yet we did wotse than them

Investment guru Warren Buffett is headed for his worst year relative to the rest of the US stock market since 2009, with shares in his conglomerate Berkshire Hathaway down 11 per cent with two more trading days to go.

The underperformance comes in Mr Buffett’s Golden Anniversary year at the helm, when he told investors for the first time that they should judge his record based on Berkshire’s share price, rather than just the book value of the company, which had been his preferred yardstick for decades.

Mr Buffett urged them to make that judgment based on the long term, rather than on a single year, reflecting investing mentor Benjamin Graham’s view that the stock market may be a “weighing machine” in the long run, but in the short term it is a “voting machine”.

But in 2015, the market has been voting negatively on Berkshire’s prospects for weathering the decline in commodity prices, according to Jim Shanahan, analyst at Edward Jones.

Although Berkshire has no oil and gas subsidiaries, its railroad business transports oil, coal and agricultural products, and its manufacturing arm sells products to the shrinking oil industry. Weak results from Berkshire’s insurance divisions in the middle of the year may also be due to lower oil prices, Mr Shanahan said, since lower petrol prices mean drivers and truckers are on the road for longer and having more accidents.

“They are impacted by the weak resources sector and commodity prices in general,” he said.

Berkshire has also been hit by big declines in two of its largest stock market investments: American Express, which is down by 24 per cent this year; and IBM, which is down 13 per cent.

Chart: Berkshire Hathaway v S&P 500

(FT a few days ago)

 

S’pore’s an inefficent innovatar

In Economy on 18/12/2015 at 5:39 am

But so’s HK: phew. M’sia and Vietnam are efficient innovators.

http://www.economist.com/blogs/graphicdetail/2015/09/global-innovation-rankings

PAP must have done shumething right since 1990

In Economy on 15/12/2015 at 4:44 pm

The PAP administration gets whacked regularly for a focus on GDP growth. Well by this alternative measure, it hasn’t done too badly by us has it?

Wage growth: three “myths” are true

In Economy, Financial competency on 10/12/2015 at 5:19 pm

Dollars & Sense a usually financial literate site, published the following PAP administration propoganda on wage growth http://dollarsandsense.sg/debunking-3-myths-about-singapores-wage-growth/?fb_action_ids=429056360617791&fb_action_types=og.comments. Has the site become part of Fabrications About the PAP? Money that good meh? Seriously, a little knowledge (especially of stats) is a dangerous thing.

Myth 1: Wage Growth Has Been Lower Than Inflation

Picture 1

Myth 2: The Lowest Income Families Are Worst Off Because Of Inflation

Picture 2

Myth 3: The Rich Benefitted The Most Compared To The Rest Of Us

Picture 3

Well the myths are not Hard Truths but facts. And the rebuttals rubbish. They are not based on economics.

My friend Chris K*(a retired financial enginner and rocket scientist, once based in London) writes:

Myths 1 and 2 completely failed to account for what is commonly known as hedonic price adjustments. Hedonic adjustments are marginal variations to the inflation rate in advanced, matured economies but are significantly higher for developing nations or those who have transit from developing to developed status like Singapore. Hedonic price adjustments are the increase in prices due to qualitiative and esthetic changes in a product or service. An example is the difference in prices between a hawker centre and a food court. The increase in prices when one transit to the other is NOT included in the inflation rate.

Once you understand the effect of hedonic price adjustments, you can then understand why the increase in the CPF Minimum Sum to account for cost of living runs significantly higher than the inflation rate.

Same with Myth 3 which also failed to account for the role of investable income in relation to total income. The top percentile has a much higher proportion of investable income because of the cap in CPF contributions. In an era of elevated real estate prices, those who can invest in a 2nd or 3rd property are those in the top percentile and they earned outsize returns om their investable income. This is why the labour policies of the present government favours the top percentile because the rate of return on investment exceeds wage growth for the rest of the income distribution.

————————————–

*Chris K describes himself thus: Chris is a retired executive director in the financial industry who had mostly worked in London and Tokyo. 

 

 

 

Three cheers for the PAP

In Corporate governance, Economy, GIC, S'pore Inc, Temasek on 07/12/2015 at 6:21 am

(Or “Why our GLCs work”)

Talking of the UK (where remember LKY and Goh Keng Swee and Toh Chin Chye- the trinity- studied. I’d describe Lim Kim San, from Raffles College, now NUS, as their archangel who did the work they ordered):

There were significant efficiency improvements in nationalising the postal system and the telegraph network, but the nationalisations of the 20th century were much less successful. This was in part due to the rise of trade unions and the move towards a fully democratic political system. While nationalised companies were left to be minded by technocratic-minded officials in the 19th century, politicians with their eyes on elections started fiddling with them in the 20th. Whenever politicians needed tax cuts to win elections they tended to hack back investment in state-owned firms. They also had a free hand to bloat their payrolls in order to help governments achieve full employment in the economy overall, protected by a system of tariffs and monopolies designed to shield them from competition. And trade unions started to demand excessive pay rises and oppose efficiency improvements, knowing that the state, as owner, would always pay the bill to avoid a fuss at election time.

http://www.economist.com/blogs/economist-explains/2015/12/economist-explains-1

Democracy? What democracy? Unions fighting for workers? What are they? Three cheers for elitism.

But this also rings true: parastatals like national airlines tend to be a handy way for government officials to dish out jobs to cronies. Neither the beneficiaries nor the benefactors of this illicit set-up want to ground the gravy plane.

(From anotther Economist blooger)

Corporate tax rates: S’pore not lowest

In Economy on 05/12/2015 at 4:51 am

And UK if not that far from us.

Reits are not bonds/ S-Reits

In Economy, Financial competency, Property, Reits on 24/11/2015 at 1:25 pm

“Real estate is TIPS (Treasury Inflation Protected Securities) on steroids,” adds Mr Steers. “Reits are not bonds. The most certain thing is that if rates are rising and you are in fixed income you will lose money.” FT 

Mr Steers is  from real estate investment firm Cohen & Steers in New York and he’s bullish on US real estate.

Meanwhile in S’pore, CNA reported on 18 November

‘GOOD DEMAND’ FOR SINGAPORE-LISTED REITS

“With the lower leverage threshold, there might be more Singapore REITs who will look to tap this source of funding, given it is still treated as equity instead of debt,” said Mr Tim Gibson, co-head of global property equities at Henderson Global Investors in Singapore. His firm manages about US$123 billion (S$175 billion) worldwide. “Investors continue to seek yield in this environment,” he added.

Mr Neel Gopalakrishnan, an emerging-markets fixed income analyst at Credit Suisse’s private banking and wealth management unit in Singapore, said: “Most Singapore-listed REITs have good credit quality. Hence, there is likely to be good demand (for their perpetuals*).”

Singapore’s listed REITs had an average debt-to-asset ratio of 34.6 per cent at the end of September, versus 32.8 per cent from a year earlier, according to data compiled by Bloomberg.

The new cap on borrowings takes effect from Jan 1 and the REITs could issue as much as S$12.5 billion of traditional debt without breaching the new threshold, said Mr Hasira De Silva, a Singapore-based analyst at Fitch Ratings.

That leeway narrows to S$7.5 billion if their S$110 billion of assets suffer a 10 per cent depreciation, he said.

http://www.channelnewsasia.com/news/singapore/perpetual-debt-the-new/2270948.html?cx_tag=undefined&cid=tg:recos:undefined:standard#cxrecs_s

CNA also reports:

Falling values, rents and occupancies for debt-backed properties could tip Singapore’s economy into further trouble amid the slowest growth in three years.

Office rents may fall as much as 7 per cent this year and another 8 per cent next year as demand slows, according to property consultancy DTZ, while home prices keep declining as a result of cooling measures and loan curbs.

On Oct 26, office landlord Keppel REIT sold S$150 million of perpetual debt without a so-called step-up coupon, a gradually rising interest rate that is usually a feature of such bonds. It sold the notes at 4.98 per cent, 183 basis points more than seven-year debt it sold in February.

In the same month, business park owner Ascendas REIT raised S$300 million issuing similar notes, while serviced apartments specialist Ascott Residence Trust issued S$250 million of them in June.

The value of Singapore’s office buildings fell 0.1 per cent in the quarter ending Sept 30 from the previous three months, while shop prices declined 0.3 per cent, according to data from the Urban Redevelopment Authority.

Home prices dropped 1.3 per cent, the most since the second quarter of 2009, according to data compiled by Bloomberg.

The FTSE Straits Times Real Estate Investment Trust Index has dropped 11.4 per cent this year, on course for its worst annual performance since 2011.

Meanwhile risks for Reits here will increase in 2016 because weak economic fundamentals will weigh on demand while new supply is added into most sectors, Fitch Ratings said in a report released on 23 Nov.

Fitch expects S-Reits with stronger balance sheets to become more acquisitive in 2016 as they try to boost earnings growth by capitalising on lower asset valuations. Sector leverage – as measured by debt to total assets – is likely to increase in 2016.

On hotel ones, earnings will likely continue declining next year, but at a slower pace, as visitor arrivals into Singapore is expected to recover. Nevertheless growth in hotel room supply in Singapore will continue to outpace demand, leaving operating conditions challenging for the sector.

“We expect ratings of CDL Hospitality Trust (BBB-) and Far East Hospitality Trust (FEHT, BBB-) to remain stable, supported by strong balance sheets, and around 40-50 per cent of income stemming from fixed rent.”

Other hospitality Reits considered in the report include Ascendas Hospitality Trust and OUE Hospitality Trust.

On industrial Reits, pressure on earnings will increase in 2016: the world economy is weak”We expect lower-specification industrial assets, such as warehouses and multi-user factories, to see weaker rental reversions than for higher-specification assets, such as business parks. The demand for business parks is stronger, and a significant part of the new supply is pre-leased,” it said. Ascendas REIT, Mapletree Industrial Trust and VIVA Industrial Trust are among the industrial REITs covered

The strong performance of healthcare Reits is likely to continue in 2016, supported by robust demand for medical services and an ageing population in Asia. Healthcare SREITs’ long-term lease structures with a high degree of rental protection and their high proportion of fixed-rate debt will also support earnings growth.

—–

*Landlords in Singapore are planning to issue perprtual bonds which are treated as equity to get around new rules curbing their debt amid a property slump. Data from Fitch Ratings showing Reits having issued a record S$700 million of perpetual notes with no set maturity date thus far this year.

The Monetary Authority of Singapore is capping borrowings of Reits at 45% of assets from next year, and debt that can be considered equity (Perpetuals) offers landlords a way out.

Under global accounting rules, bonds with no fixed maturity that allow the deferral of coupon payments can be treated as equity.

 

China’s ‘One Belt One Road’ good for S’pore

In China, Economy on 21/11/2015 at 1:12 pm

Others see a spurt of investment into regions that are already close trading partners with China. Singapore, the trading hub for Southeast Asia, could capture some of the flow.

“The country’s role as a major business, financial and trade hub for the Asia Pacific region will only be enhanced,” says Stuart Fuller of law firm King & Wood Mallesons.

(FT)

Related posts: Chinese pearls in Indonesia

S’pore’s balancing act

Fed officials hawkish abt Dec rate rise

In Economy on 17/11/2015 at 1:34 pm

NYT Dealbook

SEVERAL FED OFFICIALS READY TO RAISE RATES Federal Reserve officials are turning from the question of whether to act to how quickly to raise rates afterward, Binyamin Appelbaum reports in The New York Times.

William C. Dudley, the president of the Federal Reserve Bank of New York, had been hesitant about raising rates, but said on Thursday that there was a stronger case for moving ahead. Stanley Fischer, the Fed’s vice chairman, also suggested there was no reason to keep holding rates down.

Mr. Dudley is an influential adviser to Janet L. Yellen, the Fed’s chairwoman, and his shift reflected the tentative consensus among Fed officials that the time has come to raise the benchmark rate.

Investors and analysts now consider an increase in December all but certain. Borrowing costs have already started to rise in anticipation.

Stocks in the United States fell the most in six weeks as investors braced for the expected rate rise. The fall was also driven by a rout in commodities, which put energy and raw-materials providers under pressure.

The Standard & Poor’s 500-stock index and the Dow Jones industrial average both slipped 1.4 percent, while the Nasdaq composite index was down 1.2 percent, Bloomberg reports.

Commodity prices tumbled as the stronger dollar and a persistent slump in demand from China dampened a rebound after the summer. Brent crude closed below $45 a barrel on Thursday, while West Texas intermediate slipped below $42 after OPEC warned about the growing oil glut. Copper hit its lowest price since July 2009.

Europe and Asia joined the slide as European equities slipped to three-week low, The Financial Times reports. The FTSE Eurofirst 300 opened 0.3 per cent lower after the Shanghai composite dipped 1.4 percent, Australia’s resources-heavy S.&P./ASX 200 index dropped 1.5 percent and the Nikkei 225 slipped 0.5 percent.

Ms. Yellen has said that she expected to raise rates by about one percentage point a year, but forecasts submitted by Fed officials indicate a divergence in predictions for the benchmark rate at the end of 2016 varying from -0.1 percent to 2.9 percent.

Charles L. Evans, president of the Federal Reserve Bank of Chicago, said he was focused on pressing for rates to rise slowly, while Jeffrey M. Lacker, president of the Federal Reserve Bank of Richmond, said he would prefer a slightly rapider rate of increase than one percentage point a year.

China really loves us! No BS!

In China, Economy on 07/11/2015 at 1:36 pm

It sends us its money. Money talks, BS walks.

As at end 2013, we were the third largest destination for China’s FDI.

Ah Loong must be doing something right, right?

Chart: China-UK M&A and FDI

 

Tighten yr belts mortgagors

In Economy, Financial competency on 05/11/2015 at 1:20 pm

Enjoy Deepavali but be prepared to suffer during Christmas, New Year and CNY. Interest rates are likely to go up.

Just over a week ago when I wrote this,  interest rate futures implied less than a 3o% chance of a tise by the Fed in December (markets didn’t think the Fed would raise), whereas the odds were close to even (could go either way) yesterday morning our time. Then in NY time, interest rate futures moved to price in a 58% possibility of rate “lift-off” occurring in December, up from 50% earlier in the day. Chairman of Fed said December would be a “live possibility” for a rate rise if incoming data supported that expectation.

Minimum Wages = Rising Prices

In Economy on 03/11/2015 at 12:58 pm

Most of the debate on this topic centres around whether as a result there are less jobs being created. The evidence is mixed.

For S’poreans there should be another more pressing issue in a pay and pay city.

Business reaction has been mixed. Some sectors like care homes, pub chains and more broadly the hospitality industry said that the increases could mean laying off staff or increasing prices.

http://www.bbc.com/news/business-34416666

(Explanation: In the UK, the “minimum wage” is being rebranded as “Llving wage”: another concept really, though related.)

As a retiree, I don’t like rising prices.

Maersk issues profit warning, NOL capsises

In Economy, Shipping, Temasek on 27/10/2015 at 4:12 am

Maersk, the Danish shipping and oil firm, said it will probably make $600m (£389m) less profit than previously thought, as global demand dropped. 

The firm’s progress is seen as a good indicator of global trade, as shipping carries about nine tenths of the world’s trade, and Maersk Line is the world’s biggest container carrier.

Maersk will probably book $3.4bn in profit for 2015, it said.

Shipping companies were charging about $233 to move 20-foot containers from Asia to Northern Europe, a loss-making rate according to analysis by Reuters.

Maersk blamed the drop in earnings on slender container shipping margins. It makes about half its profit from running the Maersk Line.

“Maersk Line has been hit harder than expected by low capacity utilisation due to the low volume growth in the global container transportation market,” Sydbank analyst Jacob Pedersen said.

http://www.bbc.com/news/business-34612966

As Maersk Line consistently outperforms NOL (led by scholar, ex-SAF general and ex-Temask MD) does this mean NOL will capsise and sink without a trace when it reports results at the end of October?

Laughing mortgagees/ Betting against the Fed

In Economy, Property on 26/10/2015 at 5:43 am

(Updated at 19.30am: A few “honest mistakes”)

We’ve heard a lot in the constructive, nation-building media* and from cybernuts about coming big rises in mortgage rates. The cybernuts in TRE are happy because the rising rates show (in their demented, deranged minds) the folly of mortgagees mortsagors voting for the PAP. As though voting for their heroes, Dr Chee, s/o JBJ, Roy, Han Hui Hui, M Ravi and Goh Meng Seng would make a difference.

Well the brainless “PAP is always right” hacks and hackettes  and the “PAP is always wrong” nuts are likely to be wrong and mortgagees mortgagors will have a festive Deepavali , a Merry Christmas, a Happy New Year and a Prosperous Lunar New Year: if market expectations are to be believed.

Market expectations have played down the chance of US tighter monetary policy before next year. Futures markets predict a 32.3% chance of a rise by December, with March currently given an even chance of a Fed move.

What this means is that there come December the market thinks the Fed will stay its hand. And maybe stay its hand in March. Btw,“We see another round of QE ,,,” said Merrill Lynch this week, implying that the Fed will soon loosen policy.

But economists in London and NY still forecast rise in Fed rate before year’s end. Despite a tempering in the US labour market, 65% of the 46 economists from leading banks polled by the FT said the central bank would increase the federal funds rate at its December meeting.

If they are wrong and the markets are right, mortgagees mortgagors can keep on partying thru to end of March if not longer. The only dark cloud is that residential property prices are flat if not edging down

The Fed’s decision not to raise rates in September and October has allowed MAS to ease things a little here

On Oct 14, our central bank, the Monetary Authority of Singapore (MAS), announced that it would continue to ease monetary policy** to accommodate for the slower growth that Singapore is experiencing, largely due to weaker global growth expectations. It could do this because the Fed stayed its hand on raising interest rates.

A slower appreciation of the S$ raises the rate of inflation: not good for retirees like me. We want deep deflation.

But a slower appreciation of the S$, is good for exchange rate sensitive industries such as manufacturing, tourism, and professional services that have regional clients.

To make things simple, monetary policy is like steroids for the economy. If our economy is underperforming, MAS can stimulate it by injecting some steroids. That is what happened, by easing our monetary policy.

http://dollarsandsense.sg/how-will-singaporeans-be-affected-from-mas-relaxation-in-monetary-policy/

Coming back to the possibility of a rate rise by the end of the year: a large majority of policymakers, 13 out of the 17, or 76% 0n the Fed’s rate-setting Open Market Committee, expect a rate rise this year.

A bet against a rate rise is a bet that they will change their minds.

The big divergence in opinion between the Fed and the markets over when rates will rise means that if the Fed moves in December there will be serious volatility and mortgagees mortgagors will be having a miserable Christmas, a sorrowful New Year and an abalone-and angpow-free Lunar New Year. They’ll be crying all the way to the bank what with higher interest rates, tanking residential prices and the probability of losing their jobs.

But will the mortgagees have a Merry Christmas, a Happy New Year and a Prosperous Lunar New Year? Paying out huge bonuses? I doubt it. They’ll be worried about loan defaults.

—-

This appeared in CNA shumetime back

Mortgage rates have risen since the start of the year, and analysts have said home owners should brace themselves for further increases.

At the beginning of 2015, home buyers in Singapore could get loans that start at 1.6 per cent in the first year. That rate has been creeping up, and the figure is now around 2 per cent, for rates pegged to three-month Singapore Interbank Offered Rate (SIBOR), said CEO of financial advisory firm SingCapital, Alfred Chia.

Mortgage brokers also said rates are likely to go up further, as recent increases in the three-month SIBOR – a key benchmark used by banks when setting  mortgages – have not been fully reflected in the interest rates homeowners are currently paying.

Said Mr Chia: “With an impending rise of the US Federal Reserve rates, SIBOR is definitely set to rise.  Banks have used SIBOR or Swap Offer Rate (SOR) as a reference when they do the mortgage interest rates. Meaning to say, they peg it to a public rate, and if the rates go up or down, it will affect the mortgage interest rates the borrowers will serve.”

DBS said it expects SIBOR to rise from the current 1.13 per cent to 1.22 per cent by the end of this year, and 1.75 per cent in about a year’s time.

Should mortgages increase by the same amount, a family with an outstanding S$500,000 mortgage spread over 20 years will have to pay an additional S$137.71 a month to service the loan.

Assuming variable interest rate rises from the current 2 per cent now to 2.6 per cent next year, the monthly instalment will rise from S$2,529.42 to S$2,667.13, using DBS’s online mortgage calculator.

Analysts have said most home owners can shoulder the burden as banks must ensure borrowers can still service their home loans if interest rates rise to 3.5 per cent, according to Monetary Authority of Singapore (MAS) requirements.

**Singapore manages its monetary policy by using the exchange rate  (not interest rates like the Fed, BoJ, BoE, ECB etc. Dt Goh Keng Swee said using interest rate to control monetary policy is not effective as the exchange rate in an open, tiny economy like S’pore’s.). The exchange rate is pegged to a “sectre” basket of currencies from countries that are important trading partners. The US$ is a big, big component.

S’poreans delusional?/ Oppo don’t win elections, govt loses elections

In Economy, Political governance on 07/10/2015 at 5:48 am

According to a recent poll of 200 students by Singapore employment website STJobs, 70% of all graduates surveyed expect a starting salary of up to 4,000 SGD (£1,800) a month at the very least.

In reality though, a starting salary for a young graduate is closer to a little more than half that amount. (BBC report)

The 70% figutre reminds me that 70% voted for Ah Loong. So maybe when Dr Chee called for the 30% anti-PAP vote not to be ignored*. he has a point. Maybe as a psychologist, he has come to the conclusion that 70% of the voters are delusional, juz like 70% of the grads (who must have voted for the PAP)?

What do you think?

Are the 70% of voters delusional?

After all GDP growth has been on the downtrend since 2011

GDP growth: 15.2% (2010), 6.2% (2011), 3.4% (2012), 4.4% (2013), 2.9% (2014)

Look at the large fall after 2011. As for 2011, DBS Bank and international ratings agency Moody’s are among those to have cut their outlook for Singapore’s GDP to below 2%. The official range forecast by the government is 2% to 2.5%.

Recession coming?

But let’s be serious. Maybe despite the slow-down in GDP, life has gotten better for the voters who voted for the PAP, especially the ones that gave ah Loong the 10 point swing?

The drubbing the PAP took in 2011 was taken to heart: faced with rising discontent over housing, immigration and transport, it resolved to rectify its ways. In just four years, 100,000 flats were built, rules on foreign workers tightened and billions of dollars spent on expanding transport services.

http://www.scmp.com/comment/insight-opinion/article/1858123/after-easy-election-victory-real-work-begins-singapore

It could have added the goodies (especially in healthcare) for the Pioneer Generation. An activist who during the GE went round talking to the old folks (many there in the HDB estate) in Mountbatten SMC, told me that they appreciated the benefits. The Chiams’ Party lost badly.

Which all shows that where the PAP goofed between the 2006 GE and the 2011 GE and PE was not to spend our money on ourselves:

https://atans1.wordpress.com/2012/08/31/pms-speech-not-juz-a-change-of-format/

https://atans1.wordpress.com/2012/08/01/scoring-pm-14-months-on/

https://atans1.wordpress.com/2012/09/14/time-for-opposition-to-rethink-assumptions-lest-it-repents-after-next-ge/

“Oppositions don’t win elections, govt loses elections,” I once heard Dr Goh Keng Swee say. He was echoing the tots of politicians, analysts and strategists down the ages

——

*“At home, anger at the current political situation is palpable [Huh? OK on TRE] and some have resorted to action [TRE cybernuts are shoutong obscenities and cursing their fellow S’poreans? Nothing unusual there.] . If the PAP is content to label this group of citizens as the ‘noisy minority’, … For these people, the prospect of being unable to bring about political change through the ballot box only makes the PAP’s claim of legitimate power sound dangerously vacuous.”

https://atans1.wordpress.com/2015/09/23/will-the-real-sdp-dr-chee-pls-stand-up/

The next PM has been unveiled

In Economy, Political governance on 06/10/2015 at 5:04 am

Bang yr balls, PAPpy Indians and ang moh tua kees.The next PM is NOT going to be Tharman despite all the flattery that the ang mohs are giving him.

The next PM is going to be the newly-appointed Finance Minister Heng Swee Keat.

Look at the evidence

— The committee on “The Future Economy” will be chaired by newly-appointed Finance Minister Heng Swee Keat. The commitee will review policy measures that have been in place since 2010, and aims to help create more good jobs for workers and help firms in adapting to a lean workforce, among other future challenges.

Ah Loong, many trs ago,  chaired the economic restructuring committee when he was being groomed as the next PM.  He was then the trade and industry minister.

— Do remember that Ah Heng headed NatCon: Our Singapore Conversation was a national conversation  announced by PM in 2012. Mr Heng Swee Keat, the then Singapore Minister for Education was appointed to lead the committee that led (guided?) the conversations with S’poreans to create “a home with hope and heart”.

Which other minister has been given so much public exposure?

Finally, a cheerleader and paid-up member of the PAPpy (PAP and pro-PAP) Indians, and a leader of the Indian media mafia controlling the constructive, nation-building media wrote recently, in sorrow and defiance:

Shanmugaratnam is going to be the Cabinet’s trump card. As Co-ordinating Minister for Economic and Social Policies, he will play an extremely key role in how the country charts its future trajectory. With ministries like Finance, Trade and Industry, Manpower, Education, Social and Family Development coming under the former Finance Minister’s overall purview, the PM is signalling to Singaporeans that Shanmugaratnam is the man to watch. Never mind that he won’t become the next PM but if he pulls it off, history will reflect on this as the Shanmugaratnam moment when the seeds were planted for him to become the real architect of tomorrow’s Singapore. Like Goh Keng Swee became when he plotted the economic transformation of a newly-independent Singapore.

http://six-six.com/article/new-cabinet-a-reality-check

I like what Tharman did as Finance Minister, and his liberal views. But this guy and the ang mohs praising Tharman and their S’pore lackeys should be fair to our Ah Loong.

He gave Tharman the backing that only a PM without his reactionary minders (Father, Goh, Can’t Sing and Kumar), could give. As I’ve said before, the post 2011 GE cabinet was really Ah Loong’s first where he didn’t have anyone trying to be a back sit driver.

Related post https://atans1.wordpress.com/2012/08/24/why-tharman-will-be-the-next-pm/

Denial continues/ Swing voters not stupid, WP

In Economy, Political governance on 22/09/2015 at 5:14 am

Retired (axed?) FT MP, Irene Ho wrote on her Facebook

The “hot” topics at the election rallies that some opposition parties said they would champion are issues that many of us, including the PAP MPs, have raised before – the widening income gap, social mobility, help for single mothers, job opportunities for Singaporeans especially the middle-aged and above, helping the vulnerable groups, the cost of living, and improving public transport. Indeed, I have spoken on all these and more, and so have other PAP MPs. Here is a selection. The question is not how fiery the debate is in Parliament, but how effective is the MP in pushing for change.

Over the last 15 years as a backbencher, I do see change within the PAP – and it is not because of the opposition. It is because of your support for PAP MPs who speak up for you. I myself have benefitted from the support that you have given me, as it gave me the courage and confidence to fight for what is important to you and to the country. Please support the PAP so that it can be in a position of strength to serve you better. ‪#‎GE2015‬‪#‎PAP4SG‬

If she and other PAP MPs are so good at bending the administration’s ear, why did PAP administration after 2011 GE and PE

— stop being in denial that the public tpt system sucked;

— start that building more HDB flats raided the reserves;

— introduced the Pioneer Package etc;

— in the process spend more of our money on ourselves; and

— curb FT inflows.

If the PAP MPs were really being listened to, the first four measures would have been introduced in the early noughties, and the last after the 2006 GE.

The PAP listens to the swing voters not to its MPs.

But let’s be fair, the Oppo groupies are in denial too

Someone posted this on Facebook

How PAP won PE back in GE2015

http://anyhowhantam.blogspot.sg/…/the-punggol-east-fix-how-…

Why I am not even surprised? PAP is master at this fixing game by shifting the goal post whenever they stand to lose the election which they want to win badly.

However, PAP Mandarins do not understand this simple logic – by winning PE at all costs, they stand to get exposed even more in AHPETC-gate and AIM-gate.

Wait and watch – PAP will find more cow dung on their white attires in time to come. It is not a question of if but when.

I had told MP Tin Pei Ling on the counting day at Kong Hwa school that PAP’s #1 enemy is not WP but some hot headed brain swollen PAP Mandarins who do not understand this simple fact:

Karma is bitch – whether one is Hindu, Christian, Muslim, Buddhist, Taoist, Jew, Sikh, Jain, Atheist or Agnostic.

By the way, on the counting day, the only PAP MP I found very relaxed and self assured was Tin Pei Ling. She has long future in politics for sure because she is able to win without “help” (???) of out of date and out of tune GCT.

On 9 Sep, I had Polling agent duty (as WP volunteer) for 6 hours (2 to 8 PM). Later I followed the sealed ballot boxes (together with another WP volunteer) on the bus to Kong Hwa school counting center. I was at Kong Hwa counting center until midnight while counting was still on but the sample counting results were already announced by 9:30PM.

Around midnight, I left Kong Hwa counting center to go home – tired, exhausted and also disappointed with the results. A senior PAP Activist (PA) also left Kong Hwa school at the same time feeling satisfied with the results and sweeping victory for PAP.

I congratulated PA and we had nice chat on the way out. PA offered me ride in his car until Haig Road. I had left my car at HDB car park next to Haig Road Community Center. On the way home, I was surprised to hear that gentleman (PA) wondering whether the voting results will send wrong signals to PAP Mandarins and whether PAP will interpret the results as license to increase GST to 10%.

I was baffled. I asked PA why he thinks GST may have to go up to 10% when the Government has such huge reserves and all social spending is being spent from returns of Temasek / GIC etc. He just smiled at me.

I think that poor PA gentleman doesn’t understand the bigger problems PAP has on hand now.

Not only PAP’s bluff will be called out in AHPETC-gate / AIM-gate but now they have to deal with significant number of foreign born citizens who will also be interested in joining politics to run for political office and they will vote only for those party that protects its interests.

I am tempted to yet again share a Gujarati (my native Indian language) idiom which reads as “જે ખાડો ખોદે તે પડે” <– unreadable on Android (transliteration “je khaDo khode te paDe”) which means – the one who digs hole for others, will find himself falling in the same hole…

And that is THE problem for PAP…

My FB avarar posted: Someone still in denial. PE victory means that a forensic audit of AHPETC accounts will have to be done to determine PE’s fair share of assets and liabilities https://atans1.wordpress.com/2015/09/21/wps-punngol-east-problem-paps-excuse-king/.

Let’s give three cheers for the swing voters. They balance things they admire* about the PAP against things they deplore** and voted accordingly. The PAP listens to the swing voter, not its MPs or to Oppo MPs and parties. The swing voters are not stupid and didn’t buy into WP’s self-serving message of voting in more WP MPs. They saw that Show Mao*** was taking the money and keeping quiet.

Related post: https://atans1.wordpress.com/2015/08/14/the-great-wall-the-oppo-has-to-climb/

(When this was republished by TRE it attracted a lot of abuse.)

*Like its new-found willingness to spend S’poreans’ money on S’poreans. And it’s decent economic record.

**They don’t give a hoot that Amos kanna takan so hard that he had to beg foe mercy****; or that ang moh tua kees like Cherian George and Kirsten Han shout “repression” juz because some fourth rate trashy sites are forced to close. They notice that TRE is unmolested.

***I know he’s a good social welfare officer in his ward (like Kate Spade’s in hers) and I hear he’s being groomed to succeed Low. But that doesn’t make it any easier to accept that he’s doing bugger in making the case for WP, and in helping managing the town council.

****I’m sure many were cheering on the AG: quietly of course.

VivianB’s other folly: F1

In Economy, Tourism on 20/09/2015 at 11:20 am

Dr Chee rightly put down the guy who sneered at the elderly poor (Pioneer Package was PM’s way of saying sorry?) by reminding everyone who was responsible for overspending on the Kiddie Games by S$300m. (Btw, we never got to find out about the truth about the food poisoning of volunteers as promised did we?)

But lest we forgot, F1 was VivuanB’s idea too.

And it’s been another folly. Worse, S’pore is still paying the costs of having F1.

Singapore pays US$65m (S$83.3m) a year to bring F1 here. Only Malaysia and Abu Dhabi pay more.(BBC report).

Monaco is the only place that doesn’t pay.

So our “iconic” race is not cheap. Remember this when you read how much money F1 brings here.

The cost for organizing each race is approximately S$150 million dollars, with the government paying about 60% of the costs. And the fee is 55.6% of the cost). The government claims that each race generates about S$150 million in tourism receipts. So sounds like breakeven to me only, without taking into account the inconvenience to commuters and the lost sales at Suntec*.

https://atans1.wordpress.com/2014/10/05/f1-only-two-other-countries-pay-higher-fees/

And

It’s not as though there is a huge savings gap. In fact it’s more expensive to stage a street race, even without taking account of the economic losses.

However, the annual running costs of a street race are greater than those of one on a permanent circuit: temporary grandstands need to be built and the roads need to be upgraded to F1’s high safety standards. The biggest single expense for the operators is staffing (c£10m), followed by rental of grandstands (c£8m) and construction of safety barriers and fencing (c£5m). 

In total, the annual operating cost of an F1 street race is in the region of £36m. Then comes the hosting fee, which is paid to the F1 rights holder. The average hosting fee came to £17m in 2011 but the sting in the tail of the contracts is that the price accelerates by as much as 10 per cent every year. Most new F1 race contracts are for ten years, so by the end of the agreement the annual fee comes to around £40m thanks to the escalator clause in the contract. That means that over the ten-year duration the bill for hosting fees totals an estimated £272m (see below) with the cost of running the races coming to £360m. That makes a total over ten years of more than £600m.

With annual running costs that are far lower than those for a street race, the total cost of building a Grand Prix circuit and hosting an F1 race over a ten-year period comes in at around £560m. But promoters need to dig deep to fund that initial track construction… http://www.babusinesslife.com/Ideas/Features/The-cost-of-hosting-a-Formula-1-Grand-Prix.html … how much the key elements of a brand new Grand Prix circuit are likely to cost… [£164m]

So the difference is spending S$80m more over 10 yrs to “save” on the cost of building a permanent track. Of course, I ‘m assuming the cost of the circuit land is zero or nominal. But this being S’pore where giving away the land for public housing would be “raiding the reserves” (Mah Bow Tan), this is a non-starter. Anyway the usual suspects would shout “corruption” even if the govt was willing to lease land at a nominal price.

So, the end result is that the “little people” who have to commute by way of public transport, get screwed, So waz new?

https://atans1.wordpress.com/2013/09/08/cheaper-to-build-f1-track/

And in a meritocracy, he’s still a minister? Can sneer at the elderly poor, overspend, miscalculate badly benefits and still be a minister? Why liddat PM?

Btw, the people who come for F1 https://atans1.wordpress.com/2013/09/21/msians-pinoys-indons-love-f1-spore/

*So how abt sharing the benefits with the losers?  Especially since F1 will bring S$1b “additional value-add” for economy, says Iswaran. (S’pore expects expenses to drop about 15% to 20%, according to the Ministry of Trade and Industry. The cost of the race is about $150 million, with the government co-funding 6o% of the amount, reminded S. Iswaran, “Singapore’s second trade minister, who’s responsible for developing the tourism industry”. What he didn’t say is that hotels have to pay a special levy of 30% on room rates during F1 period, if they are “track-side” hotels and 20% for the others. )

Compensate the retailers at Suntec City  and those who work in the city? Tax rebates for them? If no such sharing of the benefits, then it’s some private profits, and big state windfall (via taxes and other levies), and public inconvenience and some private losses. Readers might also like to know that it costs at least US$120m to build a dedicated F1 circuit (excluding, it seems, land costs), so by inconveniencing commuters and some retailers, the government is passing on the one-off cost of building a F1 track to some S’poreans annually. Whoever said there isn’t a free lunch? More reason to offer compensation.  

https://atans1.wordpress.com/2012/10/01/f1-sharing-the-1bn-in-value-add-with-the-losers/

Keep keep on worrying

In Currencies, Economy on 18/09/2015 at 1:28 pm

So the Fed didn’t raise rates: Rather than looking simply at the domestic economy, the Fed is now taking notice of global developments. But that makes it harder for investors to assess which data to monitor and when the Fed will consider the global backdrop has improved. Further volatility is probably ahead.

http://www.economist.com/blogs/buttonwood/2015/09/markets-and-economics

The good news for mortgagees is that a weaker US$ against S$ may ease the pressure on interest rates. But don’t count on interest rates coming off significantly fast or soon. The trend for SIBOR etc is still upwards.

A hike is still on the table before the end of the year. Fed Chairwoman Janet Yellen said that was still the majority view of the Federal Open Market Committee members – the group responsible for setting US interest rates.

Will mortgagees be repenting? Property prices will fall further

In Economy, Property on 17/09/2015 at 4:55 am

On Monday SIBOR rate was up to 1.131%, a seven yr high, up 5.3%  up on the week before abd 147% since 2 January before.

Rising borrowing costs and a weaker currency bode ill for Singapore’s home prices amid their longest slide in more than a decade.

The three-month Singapore interbank offered rate has more than doubled in a year to the highest since 2008. The main benchmark for housing loans is seen rising further as it narrows the gap with the swap offer rate, a measure of borrowing costs influenced mainly by exchange-rate expectations. The spread reached the widest since 2009 as the Singapore dollar slumped 6.3 percent this year.

“If the Sibor catches up with the SOR in the next three to six months, that premium may be eroded and we will get further softening in property prices,” said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. “Buyers are going to factor in rate increases, so a further price correction is difficult to avoid.”

House prices may drop as much as 5 percent this year, set for the biggest decline since 2001, according to brokerage Knight Frank LLP. Developers are already grappling with falling values and lower sales after the government began introducing curbs on residential transactions as low rates and demand from foreigners prompted concerns that the property market was overheating.

http://www.bloomberg.com/news/articles/2015-09-08/no-end-in-sight-for-slide-in-singapore-home-prices-as-rates-rise (Note the Bloomberg report was last week  but the analysis for property prices and interest rates still stands.

SOR which is used for commerial property loans was up to 1,561% also the highest since lat 2008; 108% up since 2 Jan 2008.

Pricier money could also be bad both for indebted companies, Reits (they are leveraged more than the average cat,  and stocks in general.

And this is all because there’s a 28% chance the Fed will raise rates later today.
So if the Fed raises rates there could be serious problems as a probability becomes a fact:

Even if the Fed has been shouting to the world that rates will rise soon, it cannot be certain that evasive prophylactic action has been taken from Brazil, to Turkey, South Africa and Malaysia. Accidents will happen on the fateful day that the target for Fed Funds rate is lifted, if only by a smidgeon.

And there is no market oracle who can be wholly confident these accidents will be small whoopsies rather than clanging calamities.

One more thing – psychology matters.

As Haldane of the Bank of England has pointed out, we all still bear the emotional scars of the 2008 financial and economic catastrophe.

Who knows quite how anxious we will feel when confronted with the harsh reality that interest rates can rise as well as fall?

http://www.bbc.com/news/business-34256651

Why these fears of accidents, psychological damage?

.. a huge amount of cheap credit poured into economies all over the world. It has fuelled investment by businesses. It has been used to buy properties and shares. And it has spurred growth and significant – perhaps excessive – rises in the price of assets.
And of this $9.6tn, more than $3tn had been borrowed by companies and other institutions in emerging economies.

So here is the vice squeezing the half of the global economy represented by emerging economies.

On the one hand, the fall in commodity prices and the slowdown in China is undermining their growth. On the other, the cost of servicing their dollar-denominated debts is rising, because the dollar is strengthening on the expectation that interest rates will rise.

And more than that, the tap of cheap dollar funding is gradually being turned off, which means that the flow of money to these economies has been cut – and by more than just the value of reduced dollar lending, because dollar loans often sit on balance sheets and in banks, and are used to make additional local-currency loans.

But even if the Fed doesn’t raise rates, interest rates will trend higher because the Fed wants to raise rates. Come Nov, Dec, we will have the same uncertainity. Best if it raises rates, and tells us that it’s all over for the time being?

Note this post has been edited since first posting.

Why a Fed rate hike tom is so feared

In Currencies, Economy, ETFs on 16/09/2015 at 10:27 am

The rise in inter-bank rates (which impacts mortgage rates) here is part of the chain effect of fear of a Fed hike. The mkt believes that there is a 28% chance that the Fed rate will go up i.e, 70%8 believes it won’t be raised tom. So if it goes up and markets tank read this

Why financial markets are nervous about Fed’s decision tom (from NYT Dealbook).

INVESTORS HOPE FOR SMALL RIPPLES AHEAD OF FED RATE DECISION On Thursday, the Federal Reserve could increase interest rates for the first time in more than nine years. It may still hold after a violent downturn in global stock markets last month, but this moment has long been dreaded on Wall Street, and investors are hoping it won’t unleash too much turmoil, Peter Eavis writes in DealBook.

History shows that booms financed with cheap money often leave the financial system weaker, not stronger, and the fault lines become obvious when the Fed starts to tighten monetary policy.

In theory, a small increase in interest rates should not be enough to wreak havoc, but some analysts have a darker view of the weak links in the system. They say financial markets have funneled trillions of dollars intoinvestments that will prove unsustainable when interest rates go up.

And the signs of excess are everywhere. Technology companies have been able to raise huge sums even before they tap into the public markets. Debt markets have appeared overly eager to lend. Low interest rates mean investors more willing to buy stocks at historically high valuations and companies are able to borrow money cheaply to buy back their own shares and bolster earnings.

Doomsayers think these activities have continued for so long that companies are more vulnerable to a slight increase in interest rates.

However, even gloomier analysts have predicted a great reckoning for years and it has not yet happened, Mr. Eavis notes. The new restraints on Wall Street and the housing market have so far prevented a resurgence in the toxic real estate lending that occurred a decade ago.

Corporations’ borrowing costs are no cheaper when accounting for inflation. Since the end of 2008, the average, inflation-adjusted yield on corporate bonds of moderate credit risk has been 4.1 percent, compared with 3.94 percent for most of the postwar period.

The Fed’s policies also appear to have prompted a surge in lending that is more stable than the securities markets under higher interest rates. Buybacks are not certain to become less attractive, but if they do, it might prompt executives to invest spare capital in operations in an effort to increase productivity.

Yet fears about the markets themselves remain. High-frequency trading has ballooned over the last decade. Firms using automated trading account for about half of all trades in the market for Treasury Securities. Exchange-traded funds are a major force in the stock market.

E.T.F.s, whose shares are supposed to be closely tied to the value of their underlying assets, have created concerns recently. On Aug. 24, shares in some funds briefly fell to prices well below the value that they would have commanded had they stayed in line with the fund’s underlying holdings. An investor selling at that discount might take an unnecessary loss.

If heavy selling is widespread across many markets, the smooth functioning of these products and markets may be tested.

FT flood will resume?

In Economy on 07/09/2015 at 12:12 pm

[A]ccording to the MOM’s findings (see excerpt in Figure C), their conclusion is that overall labour force growth will slow down significantly by the end of the decade. Therefore, it is not unrealistic to interpret this to mean that the current tightening of foreign labour influx might be just a short term solution for the next few years, before the ‘unsustainable slow growth’ is used as a reason to open up the landscape to more foreign labour. Clearer indication as to the government’s plan for the labour force direction for the next five to 10 years is therefore necessary at this point in order for the citizens of Singapore to better weigh their future.

http://www.theonlinecitizen.com/2015/09/the-labour-force-game/

The above gives the numbers to the feeling I’ve always had: that there’s a lot of wayang and smoke and mirrors about the FT policies. And that the PAP administration is itching to open the floodgates again. And that the current FT restrictions are aimed to show that we need more New Citizens like Raj who are out to screw us.

To be absolutely fair to the PAP, at the end of this article there are three extracts quoting PM and Zorro on immigration.

But this is the reality: SDP’s Dr Paul Tambyah said something recently that deserves to be very widely known. At a recent forum organised by the National University of Singapore Society where representatives from nine opposition parties and the ruling PAP were present, Dr Paul Tambyah said that young local doctors complaining about the hours and working conditions in hospitals, were told that the hospitals could always employ FTs at lower salaries. If our brightest citizens (even straight As can’t get into the local medical schools)  are threatened with FT replacements, what about the Vocational Institutes’ grads?

https://atans1.wordpress.com/2015/08/24/zorro-sotong-or-trying-to-sotong-us-over-ft-local-numbers/

What the PM, Zorro say (from CNA)

— Speaking at the National Day Rally on Sunday (Aug 23), PM Lee acknowledged that the Singapore’s immigration policy will remain an issue for a long time.

“It is a very sensitive matter and not an easy thing to talk about, even at NDR,” he said. ” Singaporeans understandably have strong views on it. The Government has heard them, but on this matter, there are no easy choices. Every option has a downside.”

He cited policy changes that had been made. The Government has upgraded infrastructure, slowed down the inflow of foreign workers, tightened up on the approval of permanent residency and citizenship applications, and made sure that Singaporeans are fairly treated at work.

He noted that if the Government is too liberal with its immigration policy, then society can come undone. Singaporeans would be crowded out, workplaces would feel foreign and our identity would be diluted.

“If we close our doors to foreign workers, our economy will tank,” he said.

Companies would not have enough workers and some would close, meaning jobs lost. Foreign workers are also needed to build homes, he said.

So, we have to find something in between, he said. Companies would still find costs going up and would have to pass some of this on to consumers; they would also have to pass up opportunities because they can’t find the workers.

Yet, because some foreign workers would still be coming in, “some Singaporeans would still feel that Singapore is changing too fast, and would still resent having to compete with non-Singaporeans. Whichever option we choose will involve some pain,” said Mr Lee.

“Yet, I believe that I am doing what Singapore needs and what best safeguards your interest. If I did not believe that, I would not be doing it. It is my responsibility to make this judgment and act on your behalf. And having acted, I owe it to you to account to you for my decisions, for doing what I did.”

— It is the Government’s duty to grapple with the “very difficult issue” of getting the inflow of foreign labour right – and at the same time maintaining the unique identity of the nation, said Prime Minister Lee Hsien Loong.

“It is an issue where honestly speaking, there are no easy choices. There are trade-offs,” said Mr Lee, speaking on Friday (Jul 31) in a television interview with Ambassador-at-Large Chan Heng Chee, chairman of the Lee Kuan Yew Centre for Innovative Cities.

“I would like to keep this a Singapore-Singapore … it has to maintain that Singapore character.”

— The Manpower Ministry is looking at ways to help companies transfer expertise and know-how from foreign professionals to the local workforce, said Manpower Minister Lim Swee Say, as he spelt out what the ministry is doing to help strengthen the Singaporean core in the workplace.

Mr Lim said in Parliament on Monday (Jul 13) that his ministry is doing a closer analysis of the national Jobs Bank, including the number of jobs that are eventually taken up by Singaporean Professionals, Managers and Executives (PMEs).

The process, he said, will help authorities identify early signs of skills deficit among the local workforce. The information would be shared with sectoral tripartite partners to look into manpower development plans.

Tharman joking again? Or trying to BS us?

In Economy on 30/08/2015 at 4:39 am

But before I go to Tharman, let me quote Dr Chee on the problems facing some, many S’poreans (certainly not me)

the 2014 report by Credit Lyonnaise Securities Asia which showed that almost half of households in Singapore live from paycheck to paycheck with little or no savings. This is middle class that we’re talking about. They are just one major bill away from financial ruin. This can come in the form of an accident, health problem, or some other foreseeable catastrophe.

What is less surprising is the report’s finding that the majority of our elderly indicated that they are not saving. How can they when they have hardly anything to live on after they’ve paid up their HDB loan? What’s more, the little that they have is withheld under the Minimum Sum Scheme.

But what’s particularly disturbing is the finding that a high proportion of Singaporeans in their 30s and 40s are also unable to save.

How did all this come about? The cost of living in Singapore, of course, plays a major role. In 2001, we were the 97th most expensive city in the world. In a short span of just over 10 years, we hopped, stepped and jumped to becoming the most expensive city in the world, according to the Economic Intelligence Unit.

Full text of speech at *. I commend it for your reading.

Singapore’s social and economic policies, which work hand-in-hand, are long-term strategies that have been in place long before the 2011 General Election. Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam made this point on Friday (Aug 14) in a speech at the SG50 Special Distinguished Lecture, organised by the Economic Society of Singapore.

He spoke of support for the very young, starting with broad-based quality in the public school system in Singapore. When a person enters the workforce, there is Workfare where the Government tops up the wages of low-income workers. In housing, the Government went about it in a “very determined way” to ensure homes remained affordable for low- and middle-income couples, Mr Tharman said.

For seniors, the Central Provident Fund remains a critical pillar of support and the Government has introduced features like the Pioneer Generation Package and the permanent Silver Support Scheme, for the low-income elderly.

“This has been a shift that started a full 10 years ago and step-by-step, we moved up our support by intervening with people who are young, intervening in the working years and increasingly now in the senior years. It’s not just an innovation in the last five years,” Mr Tharman said.

“And I recognise of course, there’s some political cunning, saying this all came about because of GE 2011. I’m sorry it didn’t. The world did not start in 2011. We made very clear our intentions and our motivations in 2007. We made clear it was going to be a multi-year strategy and step-by-step, starting from the kids when they are young, through working life, into the senior years.

“We have been moving towards a more inclusive society step by step and we intend to continue on this journey. Learning from experience, improving where we can. But this is not a result of 2011.”** I also commend you read the rest of CNA article below because it’s a good summary of the PAP’s views on “Life, the Universe and Everything”.

Now you know why I put Dr Chee’s remarks first. How can the recent goodies be part of a 10-yr plan given the dates of the reports quoted by Dr Chee: in or around 2914.

If the PAP administration had been working since 2005 or 2006, why weren’t the results not shown in the data?

Remember Tharman’s previous attempts at telling jokes

https://atans1.wordpress.com/2014/07/10/property-tharman-trying-to-crack-jokes-again/

https://atans1.wordpress.com/2013/11/11/tharman-trying-to-tell-jokes-again/

https://atans1.wordpress.com/2012/05/03/telling-coc-jokes-ministerial-coc-needed/

Related posts

https://atans1.wordpress.com/2012/08/24/why-tharman-will-be-the-next-pm/

https://atans1.wordpress.com/2015/07/24/tharman-also-from-bizarro-spore/

https://atans1.wordpress.com/2014/03/31/another-minister-tries-telling-jokes/

But maybe, Tharman the real aristocrat (no not juz s “natural” one: he like VivianB are from ACS), thinks we are daft peasants and workers?

 

————————————————————-

*Full text of Dr Chee Soon Juan’s speech at the SDP’s 35th Anniversary Dinner on 15 August 2015:

Mr Jeffrey George, Chairman, SDP, colleagues, ladies and gentlemen,

In 1995, during the Ordinary Party Conference at which I was first elected Secretary-General of the SDP, I gave an address about the need to invest our time and effort building up a strong foundation for the party.

I related the fable of the Three Little Pigs and how it was important to erect our house with bricks rather than with sticks and straw. Only with a sound foundation could we build a premier party that we all wanted to see the SDP become.

By foundation, I meant that we had to ground the party on principles – principles that allowed the people the freedom to think and express those thoughts, principles that ensured that we enhanced opportunity for all to succeed, not just the privileged, and principles that grounded us on the idea that power is measured by our ability to care for the weakest among us.

By foundation, I also meant taking the time and having the discipline to put up considered policy papers by conducting research and consulting the people.

In the years that ensued, I was repeatedly criticised – even by those in opposition circles – for being out of touch with the masses and being too academic in my approach. My critics also argued that Singaporeans were interested only in bread-and-butter issues; democracy and political freedom were Western concepts unsuited to the Asian mind.

I never bought the propaganda because unless someone can show me that Singaporeans are somehow different from the rest of the human race or possessed DNA that made us inherently desirous of being constantly told what to do, I cannot but conclude that these views are propagated by the powerful few who want to keep the status quo.

Rising prices, stagnant wages

I have maintained that without our political rights, we cannot protect our economic interests and well-being. Recent trends have proven me correct.

Take, for example, the 2014 report by Credit Lyonnaise Securities Asia which showed that almost half of households in Singapore live from paycheck to paycheck with little or no savings. This is middle class that we’re talking about. They are just one major bill away from financial ruin. This can come in the form of an accident, health problem, or some other foreseeable catastrophe.

What is less surprising is the report’s finding that the majority of our elderly indicated that they are not saving. How can they when they have hardly anything to live on after they’ve paid up their HDB loan? What’s more, the little that they have is withheld under the Minimum Sum Scheme.

But what’s particularly disturbing is the finding that a high proportion of Singaporeans in their 30s and 40s are also unable to save.

How did all this come about? The cost of living in Singapore, of course, plays a major role. In 2001, we were the 97th most expensive city in the world. In a short span of just over 10 years, we hopped, stepped and jumped to becoming the most expensive city in the world, according to the Economic Intelligence Unit.

This is not just happenstance. It came about through deliberate planning by the PAP. For instance, the Government rewrote the Banking Act and Immigration policy to court High Net-Worth Individuals to Singapore. As a result, we have the highest proportion of millionaires and billionaires in the world. The massive inflow of foreign capital places enormous upward pressure on prices in the country.

At the same time, we imported en masse cheap foreign labour to do the lower-skilled jobs. This puts downward pressure on wages of the locals. It also has the unintended effect of lowering labour productivity levels. The government has often repeated that wages cannot outstrip productivity. The result is that real wages continue to languish.

This double whammy of rising costs and stagnating wages is what is making lives financially so tough for Singaporeans.

And what about our youth? The future looks anything but hopeful. They now have to compete with foreign students – who are getting generous financial assistance from the state – for places in our universities. And when they graduate, they have a tough time finding jobs. If they do end up with a job, many are underemployed engaging in low-paying or low-skilled positions.

And with the high HDB prices, housing has become largely unaffordable for young couples.

All this means that for our younger generation, opportunity is diminishing while stress and anxiety are increasing.

This has caused many Singaporeans to leave the country. Unfortunately, they are ones whose talent and skills we need most. Lee Kuan Yew, himself, admitted that this development is a serious problem.

So what does the Government do? Instead of examining its policies that gave rise to these problems in the first place, it opens up our immigration doors to let foreigners in by the millions ostensibly to augment innovation and job creation.

But the more people we let in, the greater the competition for opportunity, the more stressful life in Singapore becomes, the more Singaporeans choose to leave and on goes the downward spiral.

The situation has deteriorated to the point that the PAP acknowledges the problem. Both Lee Kuan Yew and Lee Hsien Long have said that without foreigners, we cannot attract investments and create jobs.

Unchecked power

How did we come to such a tragic state? After more that 50 years of uninterrupted PAP rule, we cannot produce a citizenry, or at least retain one, which can keep our country going without having to rely on foreigners?

But even as the SDP saw the situation deteriorate, our hands were tied. There was little we could do because our rulers decreed that the media had to be controlled, political parties could operate only under the most restrictive of conditions, and fundamental freedoms were tightly proscribed.

As a consequence, the ruling party’s power was unchecked. The result is a slew of problems, of which I have just mentioned a few, that our society has to grapple with.

Authoritarian control has another effect that is less obvious, perhaps, but no less damaging to our nation. It has to do with our effort to build a knowledge-based society. The fact that we are so reliant on foreigners and foreign corporations to drive our economy is more than a subtle hint that we’ve not been very successful in this endeavour. This is because a political system which demands conformity does not, and cannot, admit of knowledge creation.

Which leads me back to the point that I made at the beginning of my address, it is the same point that I have been making for the last 20 years: Without political freedom, that is, freedom of speech, assembly and association, we cannot regenerate our economy.

What’s the solution?

The question is not whether the present system will continue to serve Singapore well because clearly it can’t. Even PAP stalwarts like George Yeo have openly called for its reform.

Rather, the question must be how are we going to go about making the necessary changes. There are several areas that we must deal with if we are going to get out of the rut in which we currently find ourselves. But I will confine my answer to the one that is most obvious and immediate: elect SDP candidates into office in the coming elections.

I will point out two incontrovertible facts to underscore why it is crucial to have the SDP in the next Parliament. The first is that we are the only party that has consistently iterated that our political rights and our economic progress are two sides of the same coin, they are inextricably bound. Without advancement in our political rights, problems regarding our economic and social well-being cannot be addressed.

Second, we are also the only party to have drawn up a bold new vision for this nation and crafted alternative policies to take the country closer to that vision. There is nothing worse than asking voters to vote for change when they don’t know what that change is or might look like. We have articulated for society a future that can be better and more secure than the one we have presently. We are advocating a system where the people have the means and the responsibility to shape their own future.

In other words, we want to give voters a reason to vote for the SDP, not just against the PAP.

We want to build a system where debate, reasoned argument, and free choice is highly valued; thick on logic and persuasion, thin on rhetoric and coercion. We want the government to listen – really listen – and be responsive to the wishes and needs of the people. This can only happen with a competent, constructive and compassionate opposition in Parliament – an opposition like the SDP.

SDP’s values

But while it is important to ensure that our future is one predicated on prosperity, we don’t want to advocate ideas that focus exclusively on material wealth – not if it means having to lose our soul and the very essence of being human. And being human is to care for our fellow human beings, to show compassion to those less fortunate than us.

When did we become so callous to suffering? When did we become numb to the fact that our elderly have to clear our tables and wash our toilets or collect cardboard just to live out their remaining years on this earth? I don’t believe that we are such a nasty people. I believe that we have been led astray. We have become so indifferent to the plight of the weak and the powerless because we’ve been told for decades that no one owes us a living, that it’s every man for himself.

We must find our way back, we must find our soul again because a people without a soul is a people who will not find life, life in its most profound sense.

We must impart wisdom that invites an individual to enter the door of his conscience – the conscience that speaks loudly and clearly of our values – that people come before profits, rights before riches and wisdom before wealth.

This is who we are, this is what we stand for and it is what we must strive to uphold. These values keep us united as Singapore Democrats, it is what is going to help us succeed as a party and, most importantly, it is what is going to bring this Republic of Singapore a better future.

It has taken us time to get to where we are today but it has been necessary. We have toiled hard, tilled the soil, planted the seed and with the sweat of our brow and the tears of our spirit, painstakingly cultivated the tree of democratic progress. May it bear fruit this election.

Thank you.

**Rest of CNA report:

He added that what is unique about Singapore is that there is “broad-based upliftment”, with jobs, rising incomes and homes for every Singaporean.

“Without social strategies, without strategies that made it possible for people to develop their potential, through education, without the housing policies that gave everyone a sense of ownership, provided a sense of equity in our society, it would have been impossible for our economy to have succeeded,” said Mr Tharman.

POLICIES HAVE TRANSFORMED OVER THE YEARS

He noted that Singapore’s policies have shifted over the years. The first three decades were focused on the basics – economic survival, job creation, and providing education and housing. And the poor received few subsidies, he said.

“It worked because our economic strategies worked. Jobs were created, incomes did rise and homes went up in value steadily and the economy improved. Social well-being went up without the whole array of social policies, by just focusing on the fundamentals,” Mr Tharman said.

Social policy came to the fore in the 1990s. The Government rolled out policies such as the Edusave scheme for young Singaporeans and Medifund for those who could not afford hospital bills. They also introduced housing grants for the resale market to help more Singaporeans own homes.

“But it is only in the last 10 years, starting from around 2006, 2007, that we made more decisive shifts, a more decisive rebalancing in order to ensure we remain an inclusive society. We needed to mitigate inequality. We had seen in a decade earlier in the mid-1990s when inequality had risen, similar to the trend in most advanced countries. We needed to do more to mitigate inequality,” he said.

SINGAPORE’S LEVEL OF INEQUALITY NOT HIGH BY INTERNATIONAL STANDARDS

But Mr Tharman noted that Singapore’s level of inequality, before taxes and Government transfers, is not particularly high by international standards.

He said: “The question then is, what happens after taxes and transfers? Because all governments do want to mitigate inequality, have some redistribution, in order to reduce them. And we do too. There are some countries that in fact achieve a very large reduction in their Gini coefficient, which is about distribution through taxes and transfers.

“The classic cases in Scandinavian economies and to some extent in the United Kingdom and other European economies – those have seen a significant reduction. But the first point we must recognise is that the reduction in inequality that they have seen, the reduction in their Gini coefficient goes hand-in-hand with a very heavy burden of taxation on their population. It is not just about taxing the rich – it is the middle, the broad middle class in the society that pays a very high tax rate. Consumption tax and income tax.”

A MORE INNOVATIVE SOCIETY

Mr Tharman also spoke of the need for a more innovative society, for every company and person to “unleash their innovative spirit” to move from adding value, to creating value through research and development and new products.

That is how Singapore will survive, said the Deputy Prime Minister. He said the country is already beginning to see some results. For example, there are aggressive schemes to support start-ups and help small and medium-sized enterprises upgrade and internationalise.

He said the Government will also take the lead to invest in all Singaporeans – throughout their life.

He noted: “This is why SkillsFuture is a major investment to our future. A major social and economic investment in our future. We are not anywhere near maximising our potential. In fact, no country is anywhere near maximising their potential and we intend to be in the lead by continuously investing in every Singaporean.

“Not many of us, let’s invest in every Singaporean. So we keep improving through life, keep learning something about ourselves, we did not know about. A strength, ability, an interest. And we are going to provide the resources, the facility all around the island to make this possible.”

ON FOREIGN WORKERS AND RESKILLING SINGAPORE WORKERS

Following his speech at the Economic Society of Singapore, Mr Tharman fielded several questions from the audience, including one on foreign workers in Singapore. He said they play an important role in keeping Singapore globally competitive.

Said Mr Tharman: “There are many jobs where you just won’t be able to find enough Singaporeans to do it. And second, because there are many foreign employees who come with expertise and long track records in particular fields that really add to the global teams in Singapore being competitive globally.

“So that is the real strategy,” he said. “In Singaporeans’ own interest, you must have globally competitive teams in Singapore. But if it’s all foreigners, you do not have Singaporeans in the team. Then that is not a sensible economic strategy. So our strategy is to have a balance. Make sure Singaporeans are at the core system – core not just in a regular jobs, core not just in back-end office work, but core in innovative teams and in order for them to be in globally competitive teams.”

Mr Tharman also explained why it is important to reskill Singapore workers. “It is a good thing that we are able to add labour-saving technologies in a labour-short economy,” he said. “We are a labour-short economy so we need every form of labour-saving technology. And the right solution is to make sure that anyone whose job becomes redundant because technology takes over is reskilled, and is able to have another good job.

“And we tend to be as active, as energetic as we can in this through SkillsFuture and through our subsidies as well to help people tide over and learn a new skill.”

He said the society has to help everyone keep up with the pace of change. “Make sure they are not treated as an unemployed statistic becoming an employed statistic, but they are citizens who must feel that they are all part of the team, and if you lose your job, we take care of you and ensure you can be part of another team. That culture of respect for blue collar workers is really something we need to develop.”

– CNA/ms

Time to worry? No worries, vote PAP like in 2001 LOL

In Economy, Political governance on 26/08/2015 at 3:45 am

There’s been a lot of speculation on why PM is giving us a holiday on Friday 11 September because polling is usually on a Saturday. These range from 12th being last day of Hungry Ghost Month to a subtle reminder of 9/11.

Whatever, the turmoil in world financial markets (At the end of this post is a long piece from NYT’s dealbook describing the financial markets on Monday night NY time and the dangers to the global economy if prices continue to slide, US$ rise) will make the PAP the more attractive party to swing voters already enjoying the fruits of the PAP’s administration largesse with our money, even, if they, like me, continue to mistrust the PAP administration on FT inflows.

So expect the constructive, nation-building media to play up the dangers of the turmoil to the S’porean economy. I’m not saying that there are no dangers, there are. We are an open economy and many S’poreans are mortgaged to above their eyeballs to buy “affordable” public housing. Lose job how? Higher interest rates how? We may know that the PAP administration is responsible for many S’poreans to be mortgaged to above their eyeballs because they bot “affordable” public housing. But can a coalition of the alternative parties do better than the PAP administration in an economic crisis?

If the turmoil continues, the ground will be sweet for the PM with swing voters preferring the PAP. Remember in 2001, the year where the global economy got into trouble and 9/11, the PAP won 73% of the populaw vote and the Oppo retained their two seats (In 1997, they lost two of the four seats they won in 1991.)

——-

This appeared in NYT’s Dealbook on Monday

GLOBAL MARKETS CONTINUE TO PLUNGE Stocks continued last week’s slide, led by a rout in Asia, David Jolly and Neil Gough report in DealBook. Shanghai’s stock market closed down 8.5 percent, erasing its gains so far this year.

The market plunged despite an announcement by China’s government on Sunday that the country’s pension funds would be allowed for the first time to invest in stocks. Pension funds can now invest as much as 30 percent of their holdings in the stock market. The main state-run pension fund manages about $550 billion of ordinary citizens’ retirement savings.

The concerns over China’s economic slowdown and the souring view of once-favored emerging economies have rattled financial markets in recent days and show no sign of letting up.

Stocks fell sharply at the open of trading in Europe, with the Euro Stoxx 50, a barometer of eurozone blue chips, dropping 2.2 percent in early trading. The FTSE 100 in London fell 2.05 percent and the DAX in Germany fell 2.29 percent. Trading in Standard & Poor’s 500 futures indicated thatWall Street was headed for a downturn at its opening bell.

The tumble on Monday follows the steep sell-off on Wall Street on Friday, when the Dow Jones industrial average fell 3.1 percent, threatening to end the six-year rally in United States stocks.

The gloom hung over the entire Asian region on Monday. The Nikkei 225 stock average closed 4.6 percent lower, while Australia’s main index fell 4.1 percent, and Hong Kong’s Hang Seng Index closed down 5.2 percent.

Most Asian currencies fell against the dollar, including the Malaysian ringgit, which slipped 1.4 percent in early afternoon trading. The yen, considered a regional haven currency, rose against the dollar for the fourth day in a row. Prices for commodities such as oil and copper continued their retreat.

The sharp decline in global markets has sped up as the large mutual funds that helped fuel rapid growth in developing countries have begun retreating from those investments, Landon Thomas Jr. reports in DealBook. In the last week alone, investors pulled $2.5 billion from emerging-market bond funds, the largest withdrawal since January 2014.

The selling spree has raised concerns among regulators and economists about a broader contagion that could make it difficult for individual investors to withdraw money from their mutual funds.

Although these funds do not use borrowed money, as did the banks that failed during the mortgage crisis, they have invested large sums in high-yielding bonds and bank loans that are not easy to sell – especially in a bear market.

If investors ask to be repaid all at once – as happened in 2008 – a bank run could unfold because funds would have difficulty meeting the demands of people wanting their cash back.

Because large global banks suffered significant losses during the financial crisis and were forced to rein in their lending, more nimble bond investors stepped in.

In January, economists at the Bank for International Settlements, or B.I.S., a clearing house for global central banks, highlighted in a study how fast dollar-based lending to companies and countries outside the United States had increased since the financial crisis – doubling to over $9 trillion. This growth was coming not from global banks but from American mutual funds buying the bonds of emerging-market issuers.

Large fund companies like BlackRock, Franklin Templeton and Pimco have been inundated with money from investors eager to invest in the high-yielding bonds of emerging-market corporations and countries.

For example, Pimco’s Total Return bond fund, a mainstay for investors with fairly conservative investment goals, has 21 percent of its $101 billion in assets invested in emerging-market bonds and derivatives.

Among the many beneficiaries of this largess were commodity-driven borrowers like the state-owned oil companies Petrobras in Brazil and Pemex in Mexico, the Russian state-owned natural gas exporter Gazprom, and real estate developers in China.

One of the more extreme cases of this bond market frenzy was in Mongolia. In 2012, with expectations high that the relatively tiny economy would reap the benefits of China’s ceaseless appetite for raw materials, the government sold $1.5 billion worth of bonds, with demand from investors reaching $10 billion. That meant, in effect, that the country was in a position to borrow twice its $4 billion gross domestic product.

Three years later, the International Monetary Fund is warning that Mongolia may not be able to make good on these loans – 14 percent of which are owned by Franklin Templeton, according to Bloomberg data – and the yields have shot up to about 9 percent from 4 percent.

Brazil, China, Malaysia, Russia, Turkey and others have sold more than $2 trillion in bonds, mostly to American mutual fund companies, since 2009. As this money flowed in, financing skyscrapers in Istanbul and oil exploration in Brazil, economies and currencies strengthened.

Now as that money heads for safety, local currencies are plunging.

B.I.S. economists warned this month that because bond funds have become so large and own so many of the same securities (many of which tend to be hard to sell), a bond-selling panic can spread quickly.

What worries many regulators and economists is how much mutual fund money is now tied up in hard-to-sell bonds – an amount that far exceeds the exposure investors had to these markets in earlier emerging-market crises.

Problem S’pore, PAP face

In Economy, EDB, Political economy, Political governance on 16/08/2015 at 4:56 am

Creativity and innovation drive global business today. Capital is just one resource, important, but no longer the major differentiator.”

– Peter Georgescu, the chairman emeritus of Young & Rubicam.

For all their academic brilliance Ah Loong and team have not advanced beyond tinkering with the framework that Dr Goh Keng Swee, Hon Swee Sen and Albert Winsemius devised. Evolution is fine to a point. But surely the world has undergone revolutionary change. When they were constructing their model of serving MNCs as a path to grow the economy, serving MNCs was “neo-colonialism”. Today even Red China serves as as the MNCs’ factory.

And many of our PMEs have not gone beyond thinking like clerks, hence they are easily replicable by cheaper FTs?

 

 

 

Budget 2015: Did you know?

In Economy, Political governance on 07/08/2015 at 4:25 am

The International Monetary Fund notes, our budget surplus, as large as 8% of GDP in 2012, will shrink to less than 2% this year. Note that this “surplus” is the real surplus, as defined by internationally accepted norms, not the definition of the PAP administration.

To be far to the administration, I’m willing to accept the argument that the sale of public land should not be reflected as “current income”. It’s a sale of “capital”. But I also believe it shouldn’t be locked up in the reserves either.

 

Exports slump in Asean: Will affect S’pore

In Economy, Indonesia, Malaysia, Property on 01/08/2015 at 4:47 am

http://im.ft-static.com/content/images/c38feea2-3207-11e5-8873-775ba7c2ea3d.img

For starters, a lot less tourists from Indonesia. And upper end properties will continue to be in dolddrums.

Tharman also from Bizarro S’pore?

In Currencies, Economy, Financial competency, Political governance on 24/07/2015 at 5:26 am

(Or “Weakening economy? Uniquely PAP solution: reverse quantitative easing”)

Let me explain.

The US had a massive quantitative easing (QE, a respectable form of printing money to stimulate the economy) exercise to save the US (and the world from recession) and is now easing back on QE and planning interest rate hikes soon because the US economic is doing But Japan, the Eurozone and China have some form of QE because of worries about their economies.

Our economy is not looking good. S’pore’s economy contracted sharply in the second quarter as manufacturing slumped and is at risk of tipping into technical recession. Price pressures are subdued and expectations are building for the central bank to ease policy once again at a twice-yearly review in October. As S’pore focuses on the exchange rate, not monetary policy. an easing of S$ is called for.

But if anything the S$ could strengthen. S’pore’s plan to launch a savings bond* to encourage long-term retail savings is worrying domestic banks and those like Citi, HSBC, MayBank and StanChart who have big retail operations here, and economists who fear this bond will push interest rates up and suck cash out from an already anaemic economy.

This could cause a flight of cash from bank deposits into these bonds and force interest rates higher as banks compete to attract savers. Higher S$ rates will attract money, strengthening S$.

“Launching a retail savings bond now is almost like reverse QE,” said Chua Hak Bin, an economist with BofA Merrill Lynch here, Reuters reports.

He points to the already slowing deposit growth in the banking system, with just S$3.8 billion (US$2.8 billion) of deposits being added in the first five months of 2015, just 20 percent of the total growth last year.

He suspects the government would invest the savings bond flows overseas** (more money for HoHoHo to double down her bets at the casino***). That would further pressure loan growth, by tightening available cash and triggering a rise in deposit rates, he said.

“So the timing is not ideal. The economy has stagnated in the first half and this will worsen the situation.”

Citibank analysts expect that of a total S$559 billion of deposits in the banking system, 36 percent are savings deposits held by households. If on average the central bank issued about S$6 billion worth of bonds each year, S$30 billion would flow from the deposit base into bonds over five years, they estimate.

MAS Managing Director Ravi Menon played down fears the bond will cannibalise bank deposits.

“The savings bonds issuance numbers pale in significance compared to the total size of the banking deposits,” he said but note that the government says it will issue a maximum of S$4 billion worth of bonds this year, which is still more than a fifth of deposit growth in 2014.

Whatever, down right bizarre this decision to issue the bonds. now. But then a GE is coming.

And the bond is really good for savers. “The Singapore Savings Bond is bending the risk-reward paradigm in investors’ favor,” said Zal Devitre, head of investments at Citibank in Singapore.Government bonds yield about 0.95 percent for one-year and 2.6 percent for 10 years. Bank deposits fetch around 0.25 percent for a year and just double that for 24 months.

Other evidence that Tharman (and Hng Khiang for that matter) are aliens from Bizarro S’pore:

https://atans1.wordpress.com/2012/05/25/will-hougang-make-the-pap-moan-the-inflation-blues-not-joke-abt-it/

https://atans1.wordpress.com/2013/11/11/tharman-trying-to-tell-jokes-again/

https://atans1.wordpress.com/2014/07/10/property-tharman-trying-to-crack-jokes-again/

Backgrounder from Wikipedia: The Bizarro World (also known as htraE, which is “Earth” spelled backwards) is a fictional planet appearing in American comic bookspublished by DC comics. Introduced in the early 1960s, htraE is a cube-shaped planet, home to Bizarro and companions, all of whom were initially Bizarro versions of Superman, Lois Lane and their children and, later, other Bizarros including Batzarro, the World’s Worst Detective.

In popular culture “Bizarro World” has come to mean a situation or setting which is weirdly inverted or opposite to expectations.

—–

*The new bond, which will begin selling in October, will have a term of 10 years. It will offer the same yields as government bonds or ten times the returns on bank deposits, and can be redeemed without penalty at any point. They are are aimed at meeting a long-felt need for long-term investment options in the low-yielding economy. “The Singapore Savings Bond is bending the risk-reward paradigm in investors’ favor,” said Zal Devitre, head of investments at Citibank in Singapore.Government bonds yield about 0.95 percent for one-year and 2.6 percent for 10 years. Bank deposits fetch around 0.25 percent for a year and just double that for 24 months. the Monetary Authority of Singapore (MAS), has set a cap of S$100,000 on individual investments in the bond.

**Bizarro bonds: “Guaranteed to lose money for you”

***The late Dr Goh Keng Swee called the stock market a casino.

S’pore’s on the wrong side of history

In Economy, Malaysia on 11/07/2015 at 1:19 pm

So is M’sia (think DAP Penang) too. We belong to the MS ecosystem https://atans1.wordpress.com/2013/06/25/missed-smartphone-boom-planners-thinking-about-2025/ not that of Android or Apple.

Related post

https://atans1.wordpress.com/2015/06/29/spore-not-part-of-apples-ecosystem/

 

 

SG50: Who really built S’pore?/ A poet for S’pore?

In Economy on 07/07/2015 at 5:02 am

Certainly not Harry, nor the old guard. They played their part in building S’pore.

It was the common man* (and woman with apologies to JG and Passerby) who did it, and are still doing it despite not being paid million-dollar ministerial salaries, and despite being cursed by cybernuts for being slaves.

This has always been the case: the ordinary people did the great deeds that “great” men are credited with.

So said Bertolt Brecht  a leading 20th century German poet, playwright, and theatre director. He was a transforming playwright, and theatre director. He was also the kind of guy our Harry would have had locked up: he was a Marxist even if he had problems with the East German authorities. (Btw, he was Hollywood screen writer when he gled to the US to escape the Nazis. He returned to East Germany after WWII)

A Worker Reads History

Who built the seven gates of Thebes?
The books are filled with names of kings.
Was it the kings who hauled the craggy blocks of stone?
And Babylon, so many times destroyed.
Who built the city up each time? In which of Lima’s houses,
That city glittering with gold, lived those who built it?
In the evening when the Chinese wall was finished
Where did the masons go? Imperial Rome
Is full of arcs of triumph. Who reared them up? Over whom
Did the Caesars triumph? Byzantium lives in song.
Were all her dwellings palaces? And even in Atlantis of the legend
The night the seas rushed in,
The drowning men still bellowed for their slaves.

Young Alexander conquered India.
He alone?
Caesar beat the Gauls.
Was there not even a cook in his army?
Phillip of Spain wept as his fleet
was sunk and destroyed. Were there no other tears?
Frederick the Great triumphed in the Seven Years War.
Who triumphed with him?

Each page a victory
At whose expense the victory ball?
Every ten years a great man,
Who paid the piper?

So many particulars.
So many questions.

http://allpoetry.com/A-Worker-Reads-History

It’s the common man (and woman with apologies to JG and Passerby) that does great deeds.

Another poem that is very relevant here what with the still very liberal immigration policies:

“Die Lösung” (The Solution), a disillusioned Brecht writes:

After the uprising of the 17th of June
The Secretary of the Writers Union
Had leaflets distributed in theStalinallee
Stating that the people
Had forfeited the confidence of the government
And could win it back only
By redoubled efforts.

Would it not be easier
In that case for the government
To dissolve the people
And elect another?

https://atans1.wordpress.com/2012/09/17/rewriting-lkys-views-on-fts-and-if-so-why/

Related post: https://atans1.wordpress.com/2013/10/17/ngiam-galileo-galilei-gen-giap/

——

*To be fair to the PAP administration, the Pioneer Generation is getting some decent goodies. My ninety something mum (property, share owner) is still marveling she only gets charged $7  when she goes to a polyclinic for her regular check-up and medicine. But then there is a GE coming. But to be fair, her shares and property have done well because we had Harry as the boss for a long time.

PRCs spend more here than in HK

In Casinos, China, Economy, Hong Kong, Tourism on 27/06/2015 at 4:30 am

Casinos

PM must be doing shumething right, right?

In Economy, Hong Kong on 21/06/2015 at 3:57 am

Keep on banging yr balls in frustration Goh Meng Seng and his felow cybernuts, some of whom are so frus with the PAP that they blame the parents of the dead children for the deaths, sneering at their stupidity, as these cybernuts see it, for allowing the children to go to Sabah. More on this tom.

Singapore is sitting atop the world as the best city for FDI, ranking first globally in 2014 for the amount of greenfield inward investment it attracted. The city-state received two-and-a-half times more investment than its main rival, Hong Kong.

Also the top-ranked destination city in 2013, Singapore has strengthened its lead over London and Shanghai since then. According to figures from fDi Markets, an FT data service, 390 companies announced or launched 409 greenfield projects in Singapore last year, totalling an estimated $11bn in capital expenditure. London attracted 334 projects at $7bn, and Shanghai, 245 projects at $8bn. Hong Kong, the sixth-ranked city based on number of projects, received 162 projects at $5bn.

… Beijing, Bangalore, Dubai, São Paulo, Kuala Lumpur and Mexico City join S’pore , HK and Shanghai on the list.

FT

Spending more on poor & middle class: Not juz ’cause GE coming

In Economy, Political economy, Political governance on 19/06/2015 at 4:49 am

The PAP administration continues to throw our money at ourselves

— Poineer Generation benefits

— smaller SingHealth bills for younger oldies

— extra $ for civil servants

— improving public transport

— “savings” etc etc bonds

Must make Goh Meng Seng, Roy Ngerng, Han Hui Hui and their fellow cybernuts infesting TRE despair, and TOC despair. PAP really spending money on citizens, albeit their own money.

Doubtless post GE, they expect the goodies to stop. And S’poreans will be squeezed again. These will make the cybernuts and TOC happy again, pAP screwing the stupid voters who vote for them.

Well think again. There is a new fashion in economic thinking as this extract shows

[O]n June 15th economists at the IMF released a study assessing the causes and consequences of rising inequality. The authors reckon that while inequality could cause all sorts of problems, governments should be especially concerned about its effects on growth. They estimate that a one percentage point increase in the income share of the top 20% will drag down growth by 0.08 percentage points over five years, while a rise in the income share of the bottom 20% actually boosts growth. But how does inequality affect economic growth rates?

[T]he recent rise in inequality has prompted a new look at its economic costs. Inequality could impair growth if those with low incomes suffer poor health and low productivity as a result, or if, as evidence suggests, the poor struggle to finance investments in education. Inequality could also threaten public confidence in growth-boosting policies like free trade, says Dani Rodrik of the Institute for Advanced Study in Princeton.

More recent work suggests that inequality could lead to economic or financial instability. In a 2010 book Raghuram Rajan, now governor of the Reserve Bank of India, argued that governments often respond to inequality by easing the flow of credit to poorer households. Other recent research suggests American households borrowed heavily prior to the crisis to prop up their consumption. But for this rise in household debt, consumption would have stagnated as a result of poor wage growth. Economic eminences such as Ben Bernanke and Larry Summers argue that inequality may also contribute to the world’s “savings glut”, since the rich are less likely to spend an additional dollar than the poor. As savings pile up, interest rates fall, boosting asset prices, encouraging borrowing and making it more difficult for central banks to manage the economy.

http://www.economist.com/blogs/economist-explains/2015/06/economist-explains-11

The Hard Truths ‘ version is

Economists say that some inequality is needed to propel growth. Without the carrot of large financial rewards, risky entrepreneurship and innovation would grind to a halt. In 1975 Arthur Okun, an American economist, argued that societies cannot have both perfect equality and perfect efficiency, but must choose how much of one to sacrifice for the other. While most economists continue to hold that view …

And we know the author, enforcer of Hard Truths has gone to the hall where Mao, Stalin, Lenin, Churchill and Hitler are dining at the high table.

And we got plenty of $ without resorting to a GST increase (https://atans1.wordpress.com/2015/03/02/after-the-goodies-gst-hikes-acoming-soon/). It’ll come from our NIR

Plenty of money there:

SingFirst is proposing to spend an additional S$6 billion a year – over and above what the government is spending – to tackle what it described as “rising inequality”, funded from the net investment returns (NIR). The NIR allows the government to spend up to 50 per cent of expected long-term real returns on its net assets managed by the Government of Singapore Investment Corporation (GIC), Monetary Authority of Singapore (MAS) and more recently Temasek Holdings.

SingFirst said the money will be spent to provide free education, higher subsidised child care and higher transport subsidies, among other things. The biggest ticket item is an old-age pension of S$300 a month for 600,000 senior citizens. The party also wants to phase out the Goods and Services Taxes (GST) by increasing taxes on higher income individuals.

(CNA)

Doubtless Meng Seng* and friends will be quoting Philip Ang**, their financial expert,  on why there is no NER.

Funny that Tan Jee Say wants to abolish GST. It’s regressive but that can be overcome by real cash rebates to the poor and middle class, not the PAP’s pseudo rebate to the CPF accounts. In general, economists like GST because of its simplicity and because it taxes consumption, not investment or savings.

—-

*After last GE, Meng Seng said he would monitor and report on Bishan GRC’s spending plans, ’cause he said the projects they promised were more than Bishan could afford. Err not heard anything from him.

**When analaysing London commercial property (when trying to slime GIC), he leaves out the rental yield, saying yield is irrelevant. Well the reason why the Arab SWFs and big property investors love London is that it offers good rental yields.

Minimum wages, Productivity: Ministers talk rubbish

In Economy, Financial competency on 01/06/2015 at 10:15 am

Minimum wages

Ministers like to point out to the German industrial system (world class SMEs, R&D, apprentice system, productivity, employer union co-operation) as a model that S’pore is folllowing or trying to. After all we are the Prussians of Asia: dour, prickly, and efficent (es SMRT).

Err so why not minimum wages here? The Germans introduced a minimum wage this year, and the economy’s still powering ahead.

Germany’s labour market is defying orthodox economic wisdom. For years, most mainstream economists warned that a proposed minimum wage of 8.50 euros per hour would price up to a million workers out of their jobs. But so far the wage floor, which came into force in January, has not stopped Europe’s largest economy from churning out additional jobs.

http://blogs.reuters.com/breakingviews/2015/05/29/german-job-miracle-keeps-defying-gloom-mongers/

Related post

https://atans1.wordpress.com/2014/10/19/higher-minimum-wage-lower-unemployment/

Productivity

Following up on https://atans1.wordpress.com/2014/10/28/improving-productivity-try-this-pm-tharman-possible-reasons-for-peanuts-real-wages-growth/, the latest findings by experts like Stephen Cecchetti, an economist at the Brandeis International Business School, have found that a very large financial sector tends to precede weaker growth in productivity. “When pay on Wall Street is so high relative to the rest of the economy, you’re creating incentives for people to go into that industry that may not be the best for society over all,” Mr. Cecchetti said.

Or as  recent paper by him says high-growth financial industries hurt the broader economy by dragging down overall growth and curbing productivity.

But you can have too much of a good thing. The 2012 paper suggests that when private sector debt passes 100% of GDP, that point is reached. Another way of looking at the same topic is the proportion of workers employed by the finance sector. Once that proportion passes 3.9%, the effect on productivity growth turns negative. Ireland and Spain are cases in point. During the five years beginning 2005, Irish and Spanish financial sector employment grew at an average annual rate of 4.1% and 1.4% respectively; output per worker fell by 2.7% and 1.4% a year over the same period.

Note

— Domestic credit to private sector (% of GDP) in Singapore was last measured at 112.57 in 2011, according to the World Bank. Domestic credit to private sector refers to financial resources provided to the private sector, such as through loans, purchases of nonequity securities, and trade credits and other accounts receivable, that establish a claim for repayment.

The financial sector employs about 5% of the total workforce.

No wonder the PAP administration has always wanted to link pay rises to productivity? They know that in an economy where finance is so important, productivity increases are not possible?

More details below*

The u/m is typical of what the PAP admin says about productivity:

Even as the Singapore economy grew moderately well at a “new normal” for 2014, Singapore is falling behind in productivity, said Minister for Trade and Industry Lim Hng Kiang … Singapore is “not achieving the two to three percent (labour productivity) growth rate that we’re aiming for”.

The 10-year annual target set by the Economic Strategies Committee for 2010 to 2020, however, has remained unchanged.

Data released on Tuesday (17th Feb) showed that Singapore’s labour productivity fell by 0.8 percent in 2014 – marking the third consecutive year of decline for productivity. Mr Lim said it reflects a mixed picture, with the externally-oriented sectors doing well, and the domestic sectors faring poorly.

“In some some sectors, the performance is very decent; for example in the financial services and insurance sector, productivity growth is above 2 per cent per year. Because they are facing international competition, they have to restructure quickly”

However, he pointed out that the domestic sector is still not showing “very good results”. This was particularly in the manpower-dependent areas of construction, retail, as well as food and beverage.

… voiced concern about the transport engineering sector ,,,”this is a very cyclical business and now with oil prices coming down, their order book is still good for the next three years. But there will be a down cycle soon, and that will affect their productivity if they don’t restructure fast enough.”

And to help businesses, the Minister said the government has rolled out programmes on a broad scale, such as the Productivity and Innovation Credit scheme, as well as more targeted approachs like SPRING Singapore’s Capability Development Programme where individual companies get advice on their business growth.**

———–

people who might have become scientists, who in another age dreamt of curing cancer or flying to Mars, today dream of becoming hedge fund managers

In short, the finance sector lures away high-skilled workers from other industries. The finance sector then lends the money to businesses, but tends to favour those firms that have collateral they can pledge against the loan. This usually means builders and property developers. Businessmen are lured into this sector rather than into riskier projects that require high R&D spending and have less collateral to pledge. On a related note, see our recent Free Exchange on how bank lending has become more focused on residential property.

A property boom then develops. But property is not a sector marked by high productivity growth; it can lead to the misallocation of capital in the form of empty Miami condos or Spanish apartments. In a sense, this echoes the research of Charles Kindleberger who showed that bubbles are formed in the wake of rapid credit expansion or Hyman Minskywho argued that economic stability can lead to financial instability as financiers take more risk. And it reinforces the recent McKinsey report which shows that too much total debt (not just government debt) can be bad.

In specific terms, the authors suggest that

R&D-intensive industries – aircraft, computing and the like – will be disproportionately harmed when the financial sector grows quickly. By contrast, industries such as textiles or iron and steel, which have low R&D intensity, should not be adversely affected

The paper looks at two indicators for finance sector growth – the ratio of bank assets to GDP and that of total private credit to GDP. For industries, they examined financial dependence (the need for outside capital to finance growth rather than retained cashflows) and the R&D intensity. They find quite a large effect.

The productivity of a financially dependent industry located in a country experiencing a financial boom tends to grow 2.5% a year slower than a financially independent industry not experiencing such a boom.

This is highly significant, given that most developed economies would love to gain 2.5 points of productivity especially in a world where demography may be constraining growth.

As the authors conclude

there is a pressing need to reassess the relationship of finance and real growth in modern economic systems

This seems right given the whole focus since 2008 has been about reviving and stabilising the banking sector so it can lend to small businesses. Instead (or at least as well) it should have been about channelling finance to those industries that can expand and employ more workers. On this point, it is encouraging that the European Commission has issued a green paper on capital markets union today, hoping to diversify the financing of small businesses away from banks. But perhaps the last word should be left to Winston Churchill, who spotted this problem nearly 90 years ago when he said that

I would rather see finance less proud and industry more content

**Heck I might as well include what he said about the economy

The usual BS (Since then: On a quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded at a slower pace of 1.1 per cent compared to the 4.9 per cent in the preceding quarter, according to advanced estimates from the Ministry of Trade and Industry.)

Based on advanced estimates, the Republic’s economy grew by 2.1 per cent on a year-on-year basis in the first quarter of 2015, announced the Ministry of Trade and Industry (MTI) in a press release on Tuesday (Apr 14). This is the same rate of growth as achieved in the previous quarter, it added.)

But in February, the MTI minister said:

Forecast realistic? 

When asked if the official forecast of 2 to 4 per cent economic growth in 2015 is realistic, Mr Lim said: “This is our typical range going forward, around 2 to 4 per cent … so this is the kind of new normal that we are aiming at and this year we expect growth at about the same rate as last year, because the global environment is still challenging.”

He noted that the US was the main driver of growth for last year, and is likely to remain so this year. “Essentially it’s only the US economy that’s doing well. Europe and Japan are having a big challenge and China is managing to have a soft landing at best. So the external environment is at best slightly better than last year, but not that much better.”

“HIGHER QUALITY GROWTH”

Looking ahead to the Economic Strategies Committee’s target of 3 to 5 per cent annual growth for Singapore between 2010 and 2020, Minister Lim said that “if you look at our performance in the 10 years between 2000 and 2010, the economy grow around 6 per cent per year. But if you look at the last 4 years we are averaging around 3 per cent.”

He added that the government had worked towards slower, but higher quality growth. This included reducing the flow of foreign workers, and growing at half the rate that the country did 10 years ago.

One bright spot for the economy this year could be in oil prices. Mr Lim said the recent monetary easing by the Monetary Authority of Singapore was in response to the drop in commodity prices, and a low inflation environment. As a result, exports should benefit from a lower Singapore dollar.

“Lower oil prices, we think its net plus for the economy, because we are an oil importing country, it’s a net plus for the businesses because electricity prices will come down, transport prices will come down. So businesses will do much better their input costs will come down”

But Mr Lim also cautioned that the low interest rate environment would end soon, “it’s likely that in the US the interest rate will be raised sometime this year…at some point in time, we must adjust to a more normal situation where interest rates have to reflect the cost of people lending you money.” He added that this is the reason why MAS has taken steps in the last few years to ensure personal debt remains healthy.

Amid the uncertainties in the global economy, Mr Lim said the focus for Singapore’s economy as she celebrates her golden jubilee is to perhaps emulate the US economy.

“We are having a more developed economy structure, our demographics are very similar to Japan and Europe – we are ageing very rapidly. So how do we try to have an economy that is more innovative, more dynamic, more like the US economy and less like the European and Japanese economy. That’s our big challenge.”

CPF’s tax-like features/ No FTs, no land scarcity?

In CPF, Economy, Property on 26/05/2015 at 4:02 am

In a rubbishy response (OK mainly rubbish) published by TRE in response to another piece of rubbish (OK PAP BS) in Five Stars and a Moon (Sorry no links to both as I don’t promote rubbish) there are two gems among the BS responses in TRE that nail the untruths that the PAP administration, the constructive nation-building media and their allies in new media peddle as “right” thinking.

Why CPF is not “our money”: It’s tax-like

Funnily enough, Five Star and a Moon writer Tay Leong Tan (surnames of 3 persons) accused Roy Ngerng of being selective in the use of information which I agree to a certain extent. But Tay Leong Tan themselves are selective in the way they interprete Roy’s selective use of information.

On one issue Roy is right even though he did not argue in it in a coherent way. In the cost – benefit analysis of our CPF and the tax funded European social security system, CPF contributions need to be considered as if it is tax in order to compare like for like. The difference between the two systems is that we own an account in CPF with supposedly our own money whereas the Europeans own a set of social entitlements from their government. These entitlements are almost free healthcare, state pension, long term illness, disability, childcare, survivorship, out of work benefits. That is far more comprehensive than our own.

Now think of how the govt withholds CPF funds after age 55, how medisave and CPF Life are dispensed, it tells you that the govt treats what we get from CPF as if they are a set of social entitlements but heck of a lot less comprehensive than the European states.

Perceive the workings of CPF in reality, one has to consider CPF contributions as tax. Period.

[Where I would disagree is that it isn’t quite a tax because a nominee can inherit everything a person has saved if he dies before 55, though if a CPF holder lives a long time, the amounts inherited become nominal. So not quite a tax.]

Relate rising land prices to FT horde

In regards to “land scarcity” [the 5 Stars piece parroted the line that apts are expensive, ’cause land is scarce], I love to pose these questions:

Will land be scarce if our population is 4.4m today instead of 5.4m?

If land is scarce today at 5.4m, then is land not scarce at the 6.9m planning projection in the PWP?

In other words, land scarcity is relative especially seen in light of the govt’s near monopoly of land. Land scarcity is a figleaf to obscure the fact that govt’s capital and labour intensive growth model uses too much labour which ought to be mitigated by increased land supply but that did not happen. Why? Simple – the mismatch between land supply and macro-economic policy drives up land prices delivering massive revenues into the government’s surpluses.

Like the other 8 issues, this paints those behind Five Stars and a Moon as being unable to look beyond their own cognitive delusions caused by too easy an ingestion of PAP narratives and what the MSM reported.

The guy providing these insights is Chris K, who describes himself thus: Chris is a retired executive director in the financial industry who had mostly worked in London and Tokyo. He writes opinions and commentaries mostly on economic and financial matters.

He is the new hero of the cybernuts. If PAP that smart, a GLC or TLC should offer him a job. That’ll shut him up. But they never did give the editor of TRE IT contracts, so PAP not that smart. Taz why they have people like Jason Chua of Fabrications of the PAP: peanuts get monkeys.

One of these days, I’ll blog on when a conservative group of S’poreans kicked him out of their Facebook group, leaving him to scream, “Prp PAP treated like a criminal.” Most of the members of the group would subscribe to the PAP’s “right” tots cited above.