TR EMERITUS

Written by Our Correspondent In the second part of his interview with Straits Times yesterday, Senior Counsel Mr Philip Jeyaretnam said the breakthrough which Singapore needs to make is having an establishment which encompasses the full range of political opinions within the constitutional set-up of Singapore. Mr Philip Jeyaretnam is the younger son of late opposition leader J.B. Jeyaretnam who was widely loved and respected by Singaporeans. He was recently appointed to the Public Service Commission. When asked if he has become more "entrenched" within the establishment now with his new role, Philip said: "There is some basis in reality for the perceptions of an identification of state with, first of all, the Minister Mentor, who had such a strong role in the first 30 years of Singapore's independence and, secondly, with the PAP. And that needs to be countered and changed as we go forward." While the opposition often plays a critical role in other modern democracies like Japan, South Korea, Taiwan, Hong Kong and Malaysia to check on the ruling party, it is regarded as a nuisance by the Singapore government and is often marginalized in mainstream society. Due to a historical aberrancy resulting from the boycott of the 1968 elections by the opposition party Barisan Sosialist, the PAP had enjoyed 50 continous decades of one-party rule with little or no opposition in parliament. Singapore's strongman Lee Kuan Yew once made a remark in the 1984 issue of the PAP newsletter Petir that he is not afraid to admit that the PAP is the government of Singapore and vice versa. Quoting the example of England, Mr Jeyaretnam felt that regardless of one's political convictions, all political parties in Singapore should be part of the establishment within the constitutional set-up of Singapore: "Another example would be England, where you would have programmes on TV where, if they have a Conservative politician, they'll have a Labour politician and a Liberal Democrat politician. Whether they're in opposition or not, ultimately they are part of the establishment. They may be seeking change, sometimes radical change, but it's within the framework that each of those parties seeks the best interest of the nation," he added. The idea of multi-party democracy is anathema to the PAP which continues to regard itself as the only political party with the inherent right to govern Singapore. Prime Minister Lee Hsien Loong quipped last year that Singapore has too few talents to have two strong political parties and it will be better off to have one dominant party like the PAP in control of all institutions of the state. During an election rally in 2006, PM Lee said rather nonchalantly that he would have to spend time "fixing" the opposition if more of them were to get into parliament. He was forced to make a public apology in the papers next day. PM Lee recently introduced some electoral "reforms" to allow more non-PAP voices in parliament. The number of NCMPs and NMPs will be increased to 18, making up 20 per cent of the seats in parliament. Though the opposition parties are given more seats in parliament, they are still not in a position to challenge the PAP unless it is denied its traditional two-third majority in parliament in the next election due by 2011. Critics lambasted PM Lee's "reforms" as a ploy to appease the rising demand on the ground for more opposition in parliament while entrenching the PAP in power at the same time. In fact, the new rules may backfire against the opposition as Singaporeans will be more inclined to vote for the PAP knowing that the opposition candidate can still get into parliament as one of the "best losers".  Read More →

Reuters, 5 November 2009 Hosts South Africa will kick off the opening match of Africa’s first World Cup finals against Mexico next year with two former winners, France and Uruguay, also drawn in the same group yesterday. But if the hosts did not get the easy draw they were hoping for in Group A, neither did five times winners Brazil who play their European cousins Portugal, Africa’s strongest team Ivory Coast and North Korea in the tournament’s toughest section. The draw for the 32-nation tournament was made at the end of a 90-minute global television spectacular, featuring African music and dancing, broadcast to more than 250 million people around the world. The opening match will be staged on June 11 at Johannesburg’s Soccer City stadium with the final, the tournament’s 64th match, in the same stadium on July 11. European champions Spain, who top the FIFA world rankings, were immediately installed as 4-1 tournament favourites by British bookmakers after being drawn in favourable Group H with Switzerland, Honduras and Chile. Spain coach Vicente del Bosque said: “We can’t complain. We can’t hide the fact we are  one of the favourites to win (the World Cup).” But Spain look set to face a tough time in the last 16 where they would probably face Brazil or their immediate neighbours Portugal from Group G. Holders Italy, who beat France in the final four years ago in Germany, have a more comfortable looking ride in Group F with Paraguay, New Zealand and Slovakia. Italy’s coach Marcello Lippi said: “We will prepare without thinking whether our opponents are either easy or difficult. We will just think that these are matches to win. TOUGH GROUP Germany have it somewhat tougher with Australia, Serbia and Ghana standing in their way in Group D. Germany coach Joachim Loew said: “I’ve got a lot of respect for Serbia. They beat France and easily won their group. “They’ve got a lot of good players and they’re a very strong team. I wouldn’t call Ghana an outsider. They’re one of the stronger teams.” England meet the United States, who beat them 1-0 in a humiliating result at the 1950 finals, Algeria and Slovenia in Group C. “I think it is one of the most balanced groups,” said England manager Fabio Capello. “Algeria have beaten Egypt so they are a dangerous side. I remember there have been groups that looked easy but then became really complicated.” The draw was conducted by FIFA secretary general Jerome Valcke with South African actress Charlize Theron and the ceremony included a televised address to the world from former South African president Nelson Mandela. The country’s current president Jacob Zuma appeared on stage to make the bold prediction that the trophy would stay in Africa after the continent staged the tournament for the first time. No African team has reached the semi-finals before though Africa’s first World Cup features six African teams for the first time and there are more Africans than ever playing with the world’s best club sides. — Reuters Republished from Reuters  on 5 November 2009  Read More →

By Damon Yeo An empire of sand castles, a mirage of El Dorado, a house built with a pack of cards – call it whatever you fancy but the reality is now evident – Dubai is crumbling under the weight of the financial crisis and collapse is imminent. It is fair to say that Dubai’s fall from grace did not happen overnight. Over the last year or so, economists in the Europe and America had been predicting that the autonomous state would succumb but the worst was confirmed only on 25 November, when Dubai World asked for six-month grace period for their debts due in December this year. In the world of credit, this constitutes to a credit event and the creditors hold the right to decide if they will agree to the deadline extension or call for a default. While the global economy slowly absorbs the full impact of Dubai’s downfall, it is perhaps important at this stage to attempt to identify what had gone wrong at Dubai. The Property Bubble Burst Like many other economic downturns over history, an asset bubble burst was one of the main catalysts of the current crisis in Dubai. Unlike in the States or the UK, a property price index was only developed for Dubai in early 2009 and it is difficult to quantify the magnitude of the initial property boom and its subsequent crash. However, it is known that the property boom was largely driven by megaprojects. Ambitious projects like the Palm Islands, the World and the Burj Dubai were all commissioned between 2004 and 2005. Burj Dubai is expected to open in January next year, but works on the Palm Islands and the World appeared to have grinded to standstill. In late 2008, Bloomberg began to run reports on the vulnerability of the Dubai property markets. Deutsche Bank estimated that property prices have fallen by over 50% since August 2008 and will continue to dip another 15% to 20% in the coming twelve months. Investors who bought properties in the last two or three years are definitely in negative equity now, with little hope of returning into the black in the near future. Dependence on Foreigners The expansion of Dubai was largely driven by the influx of foreigners since the late 1990s. According to latest data, the population of 2.2million in Dubai was made up of nearly 83% non-nationals. Foreigners took up various jobs across various levels of the economy, from construction labourers and waiters to company CEOs and hotshot bankers. Many of them were attracted to the Emirate because it offered an income tax-free environment and a relatively low cost of living. Problems arose when the credit crunch hit Dubai. As construction projects slowed, large number of Indian and Pakistani labourers returned home. Other bankers, lawyers and accountants who were laid off by companies left almost immediately. These foreigners did not have kinship or any other sort of attachment to Dubai, hence could pack up and leave the city overnight. The sudden departure of expats inevitably has a herding effect on those that remain. Businesses catering specifically to wealthy foreigners shut to avoid further losses, dampening the once renowned vibrant night life. The state of the economy hence suffers a downward spiral as people left the city in numbers. Draconian Laws Others have pointed out in retrospect that Dubai’s draconian law around failure to pay off debts is another reason for its eventual downfall. Debt payment delay is a criminal offence, even for foreigners who work in the country. It is noted that one can go to prison even for a bounced cheque. When times are good, very few take note of this particular law, since few are in debt to start with. When the times turn sour, people start delaying their repayments to credit card companies and reality hit them hard. There are expats in jail at the moment because of this. This is contributing factor to why many foreigners leave it in such a rush. There are numerous reports on luxurious cars being left abandoned at airport car parks as expats literally flee Dubai as fast as they could. Most of them will not return ever again, as they face possible jail time once they set foot onto the country. Sense of Invincibility Pride comes before a fall. The most damning factor for Dubai’s demise in my humble opinion is the sense of invincibility which had surrounded the economy all this while. From Dubai ruling family’s perspective, they wanted to expand Dubai at all cost. They were hungry for more wealth and status all the time. Through their various investment vehicles, Dubai made ambitious acquisitions globally. Their relentless pursuit of expansion meant that at times, they had made questionable investments, financed mainly by debt. One of their most dubious investments was their US$5 billion stake in MGM Mirage, a casino and developer company based in Las Vegas, in 2007 (it is controversial as well because Muslims are forbidden to gamble). Barely two years on, the entire investment decimated in value as MGM struggled to deal with falling patronage to their chains of casinos because of the credit crunch. In March this year, Dubai World filed a lawsuit against the former owners of MGM when the latter started to report that they may not be a going concern. For all other investors of the Dubai dream, they had foolishly believed that Dubai was too big to fail. They believed that no matter what happens, Abu Dhabi, Dubai’s richer and more influential brother, will step in to provide support. After all, Abu Dhabi holds 9% of the world’s oil reserve. However, the relationship between the two states had never always been cordial. As recent as the 1940s, there had been armed conflicts between the pair. Abu Dhabi had never explicitly stated that it would provide financial support to Dubai – it was only assumed by most investors. This misaligned optimism and a false sense of security had allowed Dubai World to chalk up US$60 billion worth of liabilities in the form of bonds issued, loans and other payables to various investors ranging from sovereign funds, hedge funds and multinational banking corporations. The Road Ahead The immediate impact of this piece of news was to send shockwaves across all major equity indices globally, although within a few days, most of them had rebounded after various reports assured investors that actual impact on the financials was not as grave as firstly thought. What is to follow will be anyone’s guess. One thing for sure is that the Dubai dream is well and truly over. The Emirate has lost its status and reputable as a rock solid investment with infinite future opportunities. The state and any of its linked companies will find it difficult to acquire funding and loans cheaply in years to come and with that, the rate of expansion has to decelerate. The bigger question now is – will any lessons be learnt from this? Sources: 1) Blomberg 2) BBC 3) Wall Street Journal Other articles by Damon Yeo: >> 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 in 2004 with a degree in Accountancy. He is currently working in the finance department of a UK Bank. He is also a regular contributor at redsports.sg.  Read More →