TR EMERITUS

Written by Our Correspondent Under-fired Singapore comedian Mark Lee, who was lambasted by netizens lately for employing too many PRC workers at his coffeeshop chain Old Town White Coffee said he is very keen to employ Singaporeans, but it is not easy to do so. In an interview with Shin Min Daily, he said: "We cannot employ as many foreign workers as we like because there is a quota for local workers to be fulfilled....Local F&B bosses willunderstand how hard it is to employ Singapore workers." Mark Lee was quoted as saying on Chinese online portal xin.sg 2 weeks ago that he has so many PRC workers on his payroll that he is contemplating buying a cash-counting machine to count their salaries as they prefer to receive in cash. After Temasek Review broke the story, angry netizens threatened to boycott Old Town White Coffee for employing too many foreign workers to cut costs at the expense of Singaporeans. Mark Lee also offered an explanation on why Singaporeans shun jobs offered by his company: "As the working hours are long and they need to work in shifts including during the weekends, many Singaporeans are unwilling to take up these positions." His argument is often used by PAP leaders to defend their liberal immigration policies, leading to Singapore being swarmed by cheap and unskilled foreign workers in recent years which depress the wages of ordinary Singapore workers, especially those from the lower income group. Foreigners not only make up one third of Singapore's workforce, but 36 per cent of its resident population as well. Stung by fast rising frustration, resentment and anger among Singaporeans, PAP leaders led by Prime Minister Lee Hsien Loong had been trying to appease them by promising to slow down the inflow of foreigners. Their change in stance is however contradicted by Senior Minister Goh Chok Tong, who said recently that there will be no "turnaround" in the government's policy on foreign workers and that their numbers may actually increase in the next few years. F&B businesses have thrived in Singapore for years before the floodgates are opened to foreign workers. Some coffeeshop chains like the Ya Kun Coffeeshop employ mostly locals. Mark Lee should have explored other options of making his job offers more attractive to Singaporeans first before pinning the blame on them for being "choosy" as the PAP is wont to do.  Read More →

Written by Our Correspondent The Australian government has launched a crackdown 0n the skilled migration program to prevent foreigners from achieving "back door" permanent residency through the scheme, according to a report in The Age today. The changes will see the cancellation of some 20,000 visa applications as state governments are asked to develop new migration plans to revamp the queuing system that identifies occupations in demand and creates a point system. Speaking to a business community this morning, Australia's Immigration Minister Chris Evans argued that the skilled migration program has not been working in Australia's economic or demographic interests. ''The program has been delivering self-nominated migrants from a narrow range of occupations with poor to moderate English language skills who struggle to find employment in their nominated occupation,'' he added. Australia's move to curb the influx of skilled migrants and to protect the jobs of locals must have come as a shock to Singapore which is still importing cheap unskilled foreigners. Senior Minister Goh Chok Tong reaffirms the ruling party's liberal immigration policies when he said in a media interview last week that there would not be a "turnaround" in policy and Singapore should expect an increase in the number of foreigners in the next few years. Many of these migrants don't even know a single word of English, but are granted PRs and citizenships nevertheless. As a result of the communication barrier which hinders social integration, the ruling party now has to splash out $10 million dollars of taxpayers' monies to conduct free language classes for these newcomers. Foreigners now make up 36 per cent of Singapore's population, up from 14 per cent in 1990. Of the remaining 64 per cent who are citizens, an increasing number are born overseas. Two out of every three PR applications are successful, an astonishingly high rate for a developed nation. Unlike Australia, foreigners do not have to pass a basic English Proficiency test before they are permitted to work in Singapore. Neither do they have to stay in Singapore for a minimum period of time before they are granted PRs. To exacerbate matters, PRs enjoy essentially the same rights as Singaporeans except that they have to pay slightly more for public healthcare and education and do not qualified to purchase new HDB flats. According to a recent Wall Street Journal, the relentless influx of foreign workers into Singapore has depressed the wages of ordinary Singaporeans, increased the cost of living, especially that of public housing, decreased labor productivity and led to an overall decline in standards of living. If the current Australian government dares to implement some of Singapore's pro-foreign policies, it will probably be booted out of office by angry voters in the next election to come. Fortunately for Singapore's PAP, the opposition is too weak to mount a credible challenge and Singaporeans are too "daft" to cast a protest vote against it anyway and so it can continue importing foreigners to replace native Singaporeans with impunity in a desperate attempt to shore up its support base in order to perpetuate its political hegemony forever.  Read More →

By Damon Yeo It was mid-December 2007 [A] when the Government of Singapore Investment Corp. (GIC) made a whooping 11 billion Swiss francs (S$13.8 billion) investment in UBS. There was news earlier in the summer of 2007 about how the US housing market was showing signs of slowing down, but some of the major financial institutions were still raking in record profits and numerous equity indices were nearing their all-time highs. UBS was amongst the first of the banks to show signs of cracking. A day before GIC announced its investment, the bank had just announced a write-down of US$10billion[1] and the money raised was necessary to maintain its capital ratio and ease market fears of its stability. As GIC became the largest single shareholder of the Swiss giant (circa 9%), deputy chairman and executive director Dr Tony Tan said in a statement that GIC had “confidence in the long-term growth potential of UBS’s business, particularly in the global wealth management business”.[2] The word “long-term” does not have a fixed definition, but in the world of finance and markets, anything longer than five years is generally considered “long-term”. With UBS it never rains – it pours Since that fateful day for GIC, UBS’s fortunes had gone from bad to worse. Throughout 2008, rival banks began to report massive losses, but very few had worse results than UBS. The Board reacted by changing the management team and the new management team introduced cuts across the board, from staff numbers to bonuses. All the cuts had very little impact and in April 2008 [B], the bank’s ratings were downgraded by major rating agencies. This essentially increased the bank’s borrowing costs in the open market and further damaged its reputation of being a stable Swiss bank. The losses were mainly from its investment banking and trading arm, but alarmed customers in its wealth management division were leaving the bank. In October, the bank had little choice but to turn to the Swiss central bank for assistance. [C] In an unprecedented move, the usually non-interventional Swiss Central Bank technically bailed out UBS via an agreement to ‘ring-fence’ US$60billion of UBS’s illiquid (and poor quality) assets.[3] By then it was clearer to the markets – UBS has dabbled in the US sub-prime mortgage markets more actively than any other of their European rivals and was hurting from it. For the entire 2008 financial year, the bank lost a total US$17billion, the largest loss in Swiss corporate history. Only Citibank, Wachovia, Merrill Lynch and Bank of America had lost more in this crisis.[4] An Imminent Collapse? While the losses were staggering, it still can be said that with the backing of the Swiss government, UBS remains stable financially, at least in the short term. However, the viability of the bank’s business model in the long run was thrown into uncertainty in Feb 2009.[D] It was announced that that the bank had been made liable to pay a $780million to the taxman in the United States to settle an investigation into its operations.[5] They had also initially agreed to divulge the identities of some of their clients who had used the bank to park their wealth offshore to evade taxes in the US. Since the Middles Ages, Swiss banks had leveraged on their reputation to protect identities of their clients to lure wealthy customers, who are willing pay huge fees to the bank. UBS, in particular, was a massive player in the murky world of private wealth management. By helping rich Americans set up offshore accounts right under the noses of the taxman, the bank had approximately earned over $200million annually. At time of writing, the case between the US tax authorities and UBS is still ongoing. The American government wants the bank to reveal all of the clients they had ever helped to evade tax, but UBS is negotiating to only disclose some of these Americans and not all. This high profile case had involved the governments from both countries and is now turning into a diplomatic issue. This is a classic case of a catch-22 for UBS. On one hand, if they do back down and hand in the details of their clients to the US government, they will lose more customers in its wealth management business. They can no longer charge higher fees than their rivals because they no longer have that competitive edge over them. In business terms, the bank’s critical success factor will be lost. The bank may almost have to restart its wealth management business from scratch, in a market already saturated with other banks. On the other, if UBS decides not to co-operate, the US Courts may revoke their banking licence in the country all together. No statistics and figures are required to show how a global bank like UBS will suffer if they are not allowed to trade and operate in the world’s largest economy. Last week, Swiss Justice Minster warned that UBS may fail if no agreement was reached.[E][6] The headlines may be sensational, but she may not be exaggerating. If UBS does not suggessfully negotiate past this hurdle in the short-term, there will be no “long-term” future to talk about and Dr Tony Tan’s words will haunt GIC forever. GIC has no management involvement in UBS, so will not be directly implicated in this court case. However, if UBS does fail, the entire S$13.8bn invested will likely go down the drain (less any amounts recovered upon liquidation). S$13.8bn. That is nearly S$3,000 for every man, woman and child from Tuas to Changi in the island of Singapore. Table 1: UBS share price since Dec 2007 (A) GIC invests in UBS (B) UBS credit ratings cut (C) Swiss Central Bank intervention (D) Announcement of UBS legal case VS US Tax authorities (E) Swiss Justice Minister warns of UBS collapse [1] www.msnbc.msn.com [2] Forbes [3] Times Online [4] www.thebanker.com [5] NY Times [6] Times Online Other  articles by Damon Yeo: >> GIC’s investment in Stuyvesant Town: Unraveling the mystery >> The demise of Dubai: How the mighty have fallen >> The minimum wage: pros and cons >> HDB’s 2 billion dollar deficit: More questions than answers >> Singapore v Hong Kong >> DBS and a series of ‘unfortunate events’ >> Sale of Chartered – An Anatomy >> 3rd most competitive nation in the world and what it means to the average worker About the Author: Damon is a proud graduate of Nanyang Technological University with a degree in Accountancy. He is currently working in the finance department of a UK Bank  Read More →