New Digital Economy? US-China Trade War? Or just Incompetency?

The performance of the Singapore economy has been going downhill in recent years with many PMETs losing their jobs.  We were first told that the entire world is entering into a new era of digital economy and our workers need to learn new skills to survive. However, we ended up teaching PMETs and new graduate students how to drive Grab cars and cook in restaurants.  Thereafter, we have shifted the focus onto the US-China trade war for the depressing performance of our economy.  If anything, we ended up with the impression that many other countries are facing the recessionary gloom globally.  After all, the need to learn new skills in the new digital age and the US-China trade war should affect everybody and not just Singapore alone.

Before we jumped into any conclusions, please take a look the following table that gives the latest GDP growth rate and GDP annual growth rates over several countries in Asia, Europe and America.  The data are obtained from https://tradingeconomics.com/singapore/gdp, with proper changes to the country names and using a hyphen to connect two words as in https://tradingeconomics.com/united-states/gdp.

GDP

Growth Rate

GDP

Annual Growth Rate

Singapore

-3.40%

0.10%

Brunei

-0.50%

13.57%

Cambodia

-

7.50%

China

1.60%

6.20%

Hong Kong

1.30%

0.60%

Indonesia

-0.52%

5.07%

India

1.60%

5.80%

Japan

0.60%

0.90%

Laos

-

6.50%

Malaysia

1.10%

4.50%

Myanmar

-

6.80%

North Korea

-

2.70%

Philippines

1.00%

5.60%

Sri Lanka

1.40%

3.70%

South Korea

-0.40%

1.70%

Thailand

1.00%

2.80%

Vietnam

6.88%

6.71%

Australia

0.40%

1.80%

New Zealand

0.60%

2.50%

Denmark

0.10%

1.90%

Finland

0.20%

1.20%

France

0.30%

1.20%

Germany

0.40%

0.70%

* Greece *

0.20%

1.30%

* Ireland *

2.40%

6.30%

* Italy *

0.10%

-0.10%

Netherlands

0.50%

1.70%

Norway

-0.10%

2.50%

* Portugal *

0.50%

1.80%

* Spain *

0.70%

2.40%

Sweden

0.60%

2.10%

Switzerland

0.60%

1.70%

United Kingdom

0.50%

1.80%

Canada

0.10%

1.30%

United States

3.10%

3.20%

A total of 35 countries was included in the above list so as to remove cherry-picking in the data statistics.  Furthermore, our neighbouring South-East Asian countries were included as well as the European PIIGS countries (marked with asterisks) that were on the brink of bankruptcy about a decade ago.

I would not know how readers felt when they look at the above table to realise that Italy and Singapore are the only two countries whose economies are at risks of recession.  Our most recent GDP growth rate stands at -3.40%, which is quite far off from the second lowest rate of -0.52% by Indonesia with an annual growth rate of 13.57%.  Our GDP annual growth rate stands at 0.10%, just above the lowest rate of -0.10% by Italy.

What this means is that our economy had been severely mismanaged and we were pushing the blame onto non-existent external factors to mask our incompetence.  If our economic downturn was due to external factors, why would these external factors not affect other countries at all?

But how did we mismanage our economy?

The sorry state of affairs started some time back.  First, we put all our hopes onto the Trans-Pacific Partnership (TPP).  We thought that we were standing on high ground and we insulted China without realising the consequences.

https://news.yahoo.com/singapore-pm-draws-laughs-us-speech-111914557–politics.html

https://www.malaysia-today.net/2017/05/20/lee-hsien-loong-retiring-from-premiership-in-shame/

Next, when Philippines refused to challenge over the Hague ruling on the South China Seas, Singapore openly asked China to respect the Hague ruling which stated that the South China Seas are the territories of Philippines.

https://www.straitstimes.com/singapore/hague-ruling-singapore-urges-parties-to-respect-legal-and-diplomatic-processes-exercise

https://www.scmp.com/news/china/diplomacy-defence/article/2004638/china-urges-singapore-not-interfere-south-china-sea

However, Trump won the Presidential Race and one of his first executive actions was to remove US from the TPP when he took over as President.  In the meantime, Hong Kong detained Singapore Terrex Infantry Carrier Vehicles and China refused to allow Singapore to participate in their One-Belt-One-Road initiative.  If I am not wrong, no deal has ever been signed until today even though Lee Hsien Loong was invited to the corner back seat during the second One-Belt-One-Road meeting.  But that is not all.  China built a gigantic port in Malaysia to control the sea port businesses in the South East Asia region and rendered Singapore obsolete.  It was sweet revenge for China.

https://www.scmp.com/week-asia/politics/article/2087402/can-china-really-deliver-malaysias-singapore-slayer

https://www.todayonline.com/world/asia/chinese-money-pouring-malaysia-could-help-najib-votes

All these events took a heavy toll on our economy.  Our domestic exports were in the red since November 2018, and hit record lows in both May 2019 and June 2019.

https://tradingeconomics.com/singapore/domestic-exports-of-non-oil-nodx-pctyoy

https://www.straitstimes.com/business/singapore-non-oil-exports-plunge-159-in-may-biggest-fall-in-more-than-2-years

https://www.theonlinecitizen.com/2019/07/17/singapore-exports-decline-in-double-digit-to-17-3-in-june-biggest-drop-recorded-in-over-six-years/

https://www.straitstimes.com/business/economy/singapore-non-oil-domestic-exports-plunge-173-in-june-as-double-digit-slump-worsens

What are we going to do now?

PAP has always urged the Singaporeans to stand behind them and give them the mandate and support during times of economic woes.  They argued that we have to stand united and they will lead Singapore out of the economic doldrums.

The problem with this argument is that all evidences pointed that PAP was the one who get Singapore into the current pathetic state in the first place, with record number of PMETs losing their jobs and the economy collapsing all around us.

It is not clear what needs to be done now to rejuvenate the economy.  Some people argue for regime changes, but we cannot take it for granted that the Alternative Parties can definitely lead the country out of the current situation.  The state of affairs is so dire that Singaporeans need to understand the urgency of the matter and work to formulate concrete plans to move the country forwards.

Given the current state of affairs, can both the Alternative Parties and PAP please highlight and explain how they intend to address the economy issues in Singapore?  In particular, can the PAP please tell us what it intends to do differently, instead of using meaningless buzzwords and jargons while recycling and repackaging stale ideas from years ago?

Personally, I feel that PAP should be held accountable for the most problematic state of affairs of the economy while they were paying themselves the highest salaries in the world.  Indeed, somebody once pointed out that one of our ministers’ pay is more than the pay of the entire Malaysian Cabinet and speculated that Ho Ching’s salary can pay for the entire Singapore Parliament a few times over.  In fact, the pays are so high that, until today, both the minister’s total pay and Ho Ching’s total pay (in dollars and cents) are kept as state secrets.  But at of this moment, Malaysia’s latest GDP growth is at +1.10% while Singapore latest GDP growth is at -3.40%.  So exactly what sort of top-quality calibre ministers are we paying for and how much have we been paying them?

 

Diana Gupta

 

 

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18 Responses to “New Digital Economy? US-China Trade War? Or just Incompetency?”

  • TruBlu:

    $inCity is a good example of CORPORATE GREED leading to ECONOMIC SLOWDOWNS N IMPOVERISHMENT OF THE COMMON FOLKS even as MORE(MORE) BILLIONAIRE$ ARE BEING CHURNED OUT ?

    And,their TOTAL NETWORTH INCREASING?
    JUXTAPOSE THIS TO A GLOBAL ECON SLOWDOWN,IS THIS EVEN RATIONAL???

    ECONOMICS IS BEING TURNED UP$IDE DOWN!

    GET RID OF CORPORATE(RICH SHAREHOLDER$) GREED N THE WORLD ECONOMY WILL REVIVE!

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  • Asd:

    Motel policy don’t need local…
    Just import human who are taxable..
    No need birth rate also..

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  • One Last Shot:

    In 2015 stupid sinkies gave up reform over a rich dead man, every daft wanted a stake in history making by queuing in the rain.

    Five years down, the country has slid into further state of decline while cost of living goes up and up.

    The obsession is on hoodwinking dafties, silencing critics and creating wayang bragging rights mega projects that has little impact on improving daily lives of citizens, while CPF has turned from your retirement money, to death money, to not sure if it’s still your money.
    With a blurt from a CB mouth, the value of HDBs was wiped off, transformed instantly to a zero-value asset enhancement scam, killing off retirement for many.

    Precious time was lost over the last three decades of tikum-tikum misguided policies.

    Will there be any different to voting in the coming election?

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  • Wait till SG host US 7th Fleet:

    when push comes to shove.

    China built a gigantic port in Malaysia to control the sea port businesses in the South East Asia region and rendered Singapore obsolete

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  • Ask this question first:

    how many ordinary SG will be hired as PMET for this ?

    China refused to allow Singapore to participate in their One-Belt-One-Road initiative

    Or

    How many “Belt and Road” is China building in this 720 square KM island?

    Always ask first what kind of SG people will benefit from “Belt and Road”? You?

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  • oxygen:

    HALLUCINATORY OBSESSION WITH MUNICIPAL PREOCCUPATIONS CONSUMES all the energy, focus and fake drama showbiz of PAPpypolitics and PAPpynomics.

    Some 70% of the daft Sinkies complicit.

    @ Diana Gupta should not be surprised why we found ourselves in the economic dump scavenging for food and survival.

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  • patriot of TUMASIK:

    The IDIOTIC PM thought he was funny and cracked a silly Joke about China when invited to the US by non-other than the other IDIOT Obama!!!

    Well the JOKE is on him today and we the People and Nation must PAY for it

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  • Singaporean Kong Come:

    The incumbent G they sleep on their job or pong ten on their job. They don’t bother to crack their head. They only go shhoping for ideas bing it back to this cuntry n propaganda they innvate it. They keep on bluffing those 80% daft citizen. Actually they has no substance on their job, ccept only copy n paste ideas. Their job is soooooooooo easy.

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  • Tremendous:

    Good article. It isn’t just the economy having issues.
    It’s our fertility rate too. Recently, one MP asked why our TFR was so low in Parliament. That’s exactly the wrong question to ask.
    The correct question is why are we always at the bottom 3 worldwide ?
    2 years ago, even National Geographic published our TFR as 0.83. This must be real news since they haven’t been ordered to take down the clip yet.

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  • Harder Truths:

    $G is already in recession and has been for a long time. Government spending has kept FT employed but they need to recoup the money for all their projects from YOU, the citizen.

    In effect, the local citizens are paying for the FT to take their job and also to live in $G comfortably. The FT remit their salary overseas, so the banks who finance them rely on locals to pay for all their FT-related investments (while getting nothing back).

    No people are so stupid as $G locals.

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  • Haigen-Diaz:

    Diana Gupta, I believe you are missing the work of a great observer, Laurence J. Peter. He developed the the “Peter Principle”. People in large organizations like government, “rise to the level of their incompetence.”

    This is normally a long slow process as a person rises into the top levels of an organization. They generally stop rising when they reach their level of incompetence. The problem is, they never went through the process. They were just ‘parachuted’ into the highest levels of government. Many of them are clearly showing the effect of being in positions many levels above their incompetence lever. So they are showing “Super Incompetence”.

    I have no solution to this. Just hold on tight.

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  • Vote for Change:

    Based on the proof of incompetence as above has shown and all the fakes and falsehoods, for example, clinic subsidies, another term in Office for the MIWs would in all likeness, be disastrous for all of us, surely.

    The damage will takes it toes sooner for example the locals will be diminished in numbers of degree holders to ever think of challenging them, all or most will be replaced with foreigners who would be indebted to the regime. https://www.youtube.com/watch?v=B6UENb6AHqU

    It is based on above facts and reasoning that regime change is necessary. Why?, because it has been too opaque, too dark, no transparencies, no accountability and I always thought MiloIndianCumMalay is not right, maybe for something hideous. Constitution was changed and there’s no election, I don’t know exactly but it’s something I strongly feel, must be investigated somehow to be good for all of us.

    You will need to give absolute mandate to PV/WP so that the accounts can be set straight and all the problems [without falsehoods and deception] can be truly identified and rectified without hindrances. It is certainly better than Singaporeans being replaced by insincere and uncaring regime.

    It is shameful performance based on the pay-scale they are receiving, I would certainly agree.

    Vote for Change.

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  • Sg cheapskate:

    Just look at 54 dollars huawei mobile phone promotion, the commotion, some even arrested.

    Nah Boey , sg cheapskate

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  • oxygen:

    @ One Last Shot

    SMACK BANG ON of a hit on the head of stupid sinkies – some are too stupid to even begin to discover they are stupid to impossibility.

    One Last Shot: In 2015 stupid sinkies gave up reform over a rich dead man, every daft wanted a stake in history making by queuing in the rain.

    Five years down, the country has slid into further state of decline while cost of living goes up and up.

    The obsession is on hoodwinking dafties, silencing critics and creating wayang bragging rights mega projects that has little impact on improving daily lives of citizens, while CPF has turned from your retirement money, to death money, to not sure if it’s still your money.
    With a blurt from a CB mouth, the value of HDBs was wiped off, transformed instantly to a zero-value asset enhancement scam, killing off retirement for many.

    Precious time was lost over the last three decades of tikum-tikum misguided policies.

    Will there be any different to voting in the coming election?

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  • lky son the clown in pap:

    lky the pap emeritus liar trainer mentor guru lied. he said he would rise from grave to correct any wrong done to Singapore.

    the only human who rose and corrected wrongs is esteemed Dr Mahatir. lky, the pap emritus liar trainer mentor guru lied, as expected.

    worse he said he would meet us at cul de sac. we tell this liar. okay. let us meet. but ffff. the liar did not turn up, whether at 38 oxy road or cul de sac. so when his clown opens his clownish mouth, we know it is more of the same. we just laugh at the 70% sheep who believed in pap clown lies.

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  • Haigen-Diaz:

    The economic downturn or GDP hitting bottom to almost 1.2%, 0.1% (1Q2Q, 2019) may be symptomatic of policy missteps over the preceding decade that emphasized growth numbers over the quality and sustainability of growth. Our economy was operating at a high rate of capacity utilization, which led to sustained inflation. This was facilitated through several factors:

    1) Growth of GDP components, including consumption, capital investments and exports.

    2) Increased worldwide liquidity: loose worldwide loan circumstances and loan flow to emerging economies contributed to reduced spreads of danger and liquidity and enhanced loan lending, spurring inflation of assets and company costs, and enhanced company activity contributing to the production gap.

    3) Reduced exchange rate policy efficacy in managing inflation: population growth and delays in infrastructure development resulted in a reduced national economy slack, which increased the seriousness of trade-offs inherent in a monetary policy based on exchange rates. The MAS policy of gradual appreciation to decrease imported inflation has resulted in domestic inflation, worsened by circumstances of land scarcity that increased transportation and rents for housing.

    4) Low productivity growth and elevated employment rates: Lower labor supply has resulted in a decrease in productivity growth and a increasing ratio of nominal wage development to labor productivity growth, leading to an rise in the non-accelerating unemployment inflation rate (NAIRU). This led to a lower-NAIRU unemployment rate and enhanced wage-push inflation pressures.

    5) Increasing estate rates and rentals in the residential, commercial and office industries have led directly and indirectly to cost escalation in several respects: an increase in residential property prices stemming from a confluence of low interest rates and risk premiums ; infrastructure bottlenecks creating supply-demand imbalances ; a tight rental market ; and the promotion of public housing as a source of income.

    6) Singapore’s product markets are not adequately competitive; oligopolistic pricing and other distortions induce identical commodities prices in Singapore to be greater than in neighboring nations. The cost increases have resulted to the increase in different price of living indexes in Singapore’s rankings.

    In the Economist Intelligence Unit Living Cost Index, which monitored a commodities basket in a cross-country comparison study, Singapore ranked as the world’s most costly town in 2013 and 2014 owing to elevated transportation (Where vehicle ownership is the world’s most costly), utilities (where Singapore is the world’s third-highest) and retail expenses. The study observed that Singapore was “the world’s priciest town to purchase…

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  • Haigen-Diaz:

    Cont’d…

    even clothes”!

    In summary, inflation over the era was fueled primarily by accelerating demographic growth — which overburdened current infrastructure — and increasing land-use expenses created by worldwide liquidity, supply-demand imbalances, and institutional changes in ownership and main resource management. Other contributing variables included increasing commodity prices, and energy prices in specific, which increased business expenses. Sustained inflation has a significant effect on long-term growth opportunities owing to its adverse effect on the country’s capacity to attract and maintain human capital and investment. It decreases the real return on investment, compromising personal investment in capital, infrastructure, capacity for studies, abilities and ideas that support the economy’s long-term growth potential.

    In addition, it decreases Singapore’s attractiveness as a tourist and living destination. In addition, high property, consumer and end-user prices may be spiraling downwards, which may result in prolonged lags in market clearing despite the presence of deflationary conditions.

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  • Rabble-rouser:

    @ Haigen-Diaz:
    Very good observations from a sharp economic perspective, Bro! To succinctly summed up your brilliant article:
    1. S’pore under the PAP rule is fast running out of options for genuine economic growth – a small state that is being hammered from pillar to post by Donald Trump & by China’s actions (BRI);
    2. SG$ is actually a proxy substitute currency for the US$ similar to the HK$ (which by policy is directly pegged to the US$). Both S’pore & HK/Macau were conduits for global flows of liquidity (*sic* money laundering (casinos), corporate tax evasion & profit parking, wealth hedging by the ultra rich, etc);
    3. High inflation is symptomatic of too much liquidity entering the small scale economies of S’pore & HK which not only inflates the asset pricing bubbles but also creates massive financialization on the domestic Brick ‘N Mortar economy re: REITs, proxy bond vehicles, etc. These real estate bubbles (rentals, capital value, etc) in turn radiates into a high cost of living eco-system; &
    4. In truth, S’pore & HK suffers from too much capital infusion from foreign capital providers & because of their open economies, too much capital chasing after a limited amount of projects (for a small economy). Yet the low return eco-system doesn’t deter the foreign investor from investing here because borrowing money from their own capital markets is so cheap (near zero interest cost of funds) or they are so cash flushed but can’t keep their money in their own banks (due to negative yields in EU & Japan). But the truth is that only the ultra rich have access to zero cost of funds.
    The major problem is that income inequality & wealth disparity will become much worse for S’pore. In HK, that threshold had been reached as the dispossessed had already reached a point of no return (can’t stop protest because no road back for them). The recent property purchase by Ken Dyson of 2 high end S’pore properties only reinforces the hedging efforts of Dyson (Falling £ Forex, BREXIT uncertainty, UK trade issues after EU exit, etc). And as more ultra rich enters S’pore, the masses will feel their impact as things get more expensive!

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