TR EMERITUS

From our Correspondent The Liberal International (LI) has submitted a written statement to the United Nations' Human Rights Council citing human rights violations in several countries including Singapore and Burma, according to a report on the Singapore Democratic Party (SDP) website. LI is an international body of liberal democratic parties with ruling parties as members including the US Democratic Party. The statement called on the UN Human Rights Council to address the grave situation of human rights violations in seven countries by evoking Article 18 and 19 of the Universal Declaration of Human Rights adopted by the United Nations General Assembly which states clearly: “Everyone has the right to freedom of thought, conscience and religion,” and that “everyone has the right to freedom of opinion and expression.” Singapore is the only first world country in the group of pariah states which includes Congo, Russia, Iraq, Afghanistan, Tunisia and Burma. The statement criticized the Singapore judiciary of jailing five Singaporeans and one U.S. citizen for "contempt of court" and the prosecution of activists for taking part in a procession without a permit in March 2008. It also cite a report released by the International Bar Association (IBA) which "cast doubts on decisions made by the judiciary in cases involving PAP litigants or interests." While the submission by LI will no doubt embarrass the Singapore government, it is unlikely to gain any traction or influence among ordinary Singaporeans. The Singapore government has always maintained that "human rights" is a foreign import which is "unsuitable" for Singapore's growth and development. Unlike neighboring Malaysia, Singapore has no independent human rights commission to monitor human rights abuses by the authorities. The closest it has is Marauh, set up by veteran civil activist Braema Mathi, to "facilitate for an ASEAN Human Rights Mechanism." Maruah believe that "such a process will be good for the region and for Singapore." It is strange that Maruah is advocating for "ASEAN human rights" while failing to speak up for human rights abuses in Singapore. It remains to be seen if the Singapore government will respond to the criticisms levelled at its human rights record at the United Nations. It is not exactly a matter of national pride to be mentioned along side Burma and Iraq. Even China and Vietnam, the two official communist states in Asia are left out from the list.  Read More →

By Imran Ahmed, Business Correspondent The labour chief Lim Swee Say recently suggested that Singapore must make structural changes to bring about an economic recovery. Few details were made public other than the need to improve productivity. We can only speculate about the structural changes Mr. Lim referred to in his speech. Could it be the labour market, the trade sector, manufacturing industries, or the nature of demand for goods and services? Singapore is a small city-state in a large global village. It cannot help but be buffeted by the torrents rushing through the global economy. Nevertheless, some steps to minimize the impact of negative externalities, or those events which are beyond Singapore’s control, are possible. Encouraging greater private consumption expenditure and diversifying Singapore’s overseas earnings streams can provide one aspect in Singapore’s long term economic growth strategy. Singapore: a Trading Hub Singapore’s economy is highly dependent on international trade. The dependency adds to the volatility and a degree of helplessness among policy makers. Watching GDP growth rates swing from +5% to -5% in the span of six months are a nightmare for economic policymakers. In fact, Singapore’s economic mandarins can do nothing but watch when the international economic cycle deteriorates. The marginal impact of a small reduction in international trade can be quite severe for Singapore. Based on 2000 prices, the net contribution (exports of goods and services less the import of goods and services) of trade to Singapore’s GDP dropped from 31% in 2007 to 20% in 2008. The plunge is a direct consequence of the weakness in the global economy. The rate of Singapore’s export growth fell to 1.3% last year from 8.7% in 2007. Non-oil domestic exports to Singapore’s two biggest markets, the EU and the US fell 19% and 23% respectively. The impact on Singapore’s GDP of such external factors is apparent for all residents to see. Stimulating Domestic Demand: a Way Out Increasing domestic consumption is one way to reduce spikes caused by external factors. In 2008, private consumption expenditure (less non-residents' expenditure locally) comprised approximately 34% of GDP. By contrast, approximately two thirds of the US economy is based on consumer spending. While it is dangerous to suggest that Singapore should target such a high percentage (67%) for private consumption, it is sensible to gradually increase the domestic demand component to say 40%. Increasing consumer expenditure too far, too fast may have dangerous consequences for the banking sector by ballooning private debt to unsustainable levels. How do we increase domestic private consumption without negative side effects? Encouraging Shopping as the National Pastime The government is already doing several things to spur domestic demand. Among other measures, education and training is being subsidized to upgrade the quality of jobs being created. Accelerated spending on infrastructure is pumping money into the economy and will positively affect consumption. More controversially, the government’s efforts to expand the domestic consumer base through pro-active immigration policies are vital in increasing the overall size of the domestic consumer market. Today Singapore has 4.8 million consumers versus 4.2 million five years ago. That the new immigrants are typically skilled and have reasonable discretionary income is helpful. Another way is to gradually reduce the tax burden on consumers. The General Sales Tax (GST) at 7% seems to be on the high side for an economy which normally has a healthy budgetary operating surplus. In another article, I have written about the distorting and unfair economic effects of a regressive consumption based tax such as the GST. The distortions of a regressive across the board tax are compounded in an economy where a large percentage of the labour force is earning less than SGD 2,000 monthly (40% of the labour force in 2005). More complicated but just as necessary is to ensure that housing affordability is maintained for the mass of Singaporeans. In other words, the cost of HDB flats should not climb to a level that represents an inordinately large burden on Singaporean consumers. Generally, the cost of a home consumes the biggest part of a household budget so keeping it below (say 30%) of the budget will act as a catalyst to increasing consumption. If the HDB Resale Price Index is used as a proxy for rents and affordability of HDB units then prices have risen much faster than the overall rate of inflation. Since the start of 2004, the prices of HDB (resale) units have increased by 35%. In the same period, the consumer price index has risen by 9%. While no price control mechanism is perfect, to allow the market to operate freely in a land scarce society such as Singapore is not a viable option. Now may be as good a time as any to moderate the rate of price increases in the HDB market. The average cost of an HDB unit should stay within a particular range. The defined range should represent a (reasonable) number of years of average income required to purchase a unit. Singapore’s housing market is dominated by the government. By regulating the supply (at controlled prices) of HDB units the Singapore government exerts enough influence to moderate or at least control the rate of HDB resale price increases. No Port in a Storm is Unaffected Structural reforms of Singapore’s economy are an ongoing process. The labour markets are free and open – an economists dream. The banking system is well capitalized. The sector has benefitted from the republic’s clean reputation and privacy laws to catapult itself into a major private banking hub during the last decade. Manufacturing has nicely moved up the value chain and is verging on the purely research and high technology areas. The services sector remains competitive. The under construction casinos will add a new dimension to domestic consumption patterns. In spite of all this, Singapore’s interconnectedness with the international economy increases its vulnerabilities. The economy’s openness must not be trimmed. Yet, other measures to temper the dependency must not be ignored. These additional policies represent a complementary strategy which will augment Singapore’s active participation in the international marketplace. An increased reliance on a robust domestic economy is one way to minimize negative externalities. Managing income via the taxation regime, and limiting expenses through manipulating housing costs are two possible ways to encourage domestic consumption. Another alternative is to examine foreign trade flows and income streams. Perhaps proactively managing these two areas may also help in lessening the magnitude of external shocks. In a future article, I will examine this subject in greater detail. About the Author: Imran Ahmed majored in Diplomacy and World Affairs. He had been a finance professional for the last 20 years, most recently spending five and a half years in Dubai before his return to Singapore a few months ago. Imran blogs at www.imranwrites.blogspot.com  Read More →

From our Correspondent Singapore hopes to explore new areas of cooperation with China, particularly long-term collaboration in the post-financial crisis era, said Senior Minister Goh Chok Tong who was in China for a five day state visit. After meeting with Chinese Vice Premier Li Keqiang earlier, SM Goh met Chinese Premier Wen Jiabao during which they agreed to hold a high-level dialogue next year to discuss economic strategies beyond the current financial crisis. SM Goh said while no concrete projects are expected to arise from the dialogue, both sides hope to find a common ground to marry concepts. Singapore's first major foray into China was in 1994 when the government invested heavily together with the Chinese government to set up the China-Suzhou Industrial Park. The project soon went into problems as the  Suzhou municipal government dragged its feet over the project and tested Singapore's patience by embarking on a rival cut-price industrial park of its own, called Suzhou New District. As the Suzhou City government had a majority stake in SND, it largely ignored the SIP and concentrated on promoting the SND instead. After incurring losses of some US$90 million over 5 years, the Singapore consortium lowered its stake to 35 percent, raising the Chinese consortium’s stake to 65 percent from 35 percent and reducing the Singaporean share from a planned 70 sq.km. to just 8 sq.km (source: wikipedia) One year after Singapore lowered its stake, the park made its first profit of $3.8 million. Till today, it is not known how much money Singapore has lost in Suzhou. Then Singapore Trade and Industry Minister George Yeo declared any hope of replicating Singapore within the mainland a lost cause: "To achieve clean government and social cohesion across races, between rich and poor, between the well-educated and less-educated, to do a 15 per cent wage cut across the board and not have Singaporeans rioting, demonstrating or going on strike, that's something uniquely Singaporean, and not easily replicated anywhere in the world," Mr Yeo said. 14 years later after the bitter lesson, Singapore will be embarking on another ambitious joint project with China, this time to set up an eco-city in Tianjin. According to official sources, the Sino-Singapore Tianjin Eco-city seeks to address the challenge of sustainable development in a holistic and balanced manner, and this aim is underpinned by the concept of man living in harmony with his fellow man, with the economy and with the environment. The project will involve a host of government agencies and state-linked companies from Singapore such as HDB, LTA, IE Singapore and URA. The ground-breaking ceremony for the project took place in September last year. The start-up phase of the project (3 sq km) is expected to be complete within the next 3 to 5 years. The entire 30 sq km should be completed in 10 to 15 years' time. Upon completion, the population size has been projected to reach 350,000. Perhaps mindful of Singapore's previous setback in Suzhou, Premier Wen reassured SM Goh that China will not allow it to fail. "In Premier Wen's view, this is a very important project. He reiterated that it must succeed... and we must not allow it to fail," said Mr Goh. In the case of Suzhou, then President Jiang Zemin and Premier Zhu Rongji had also repeatedly given Singapore leaders their personal assurances the project would be given special priority status. As a Chinese saying goes: "Shan gao huang di yuan - The mountain is high and the emperor is far away." Singapore should proceed with more caution this time to prevent a repeat of the Suzhou fiasco. Related articles: >> Suzhou Industrial Park becomes model of Singapore-China cooperation >> Why there was zero “foresight” in investing in Suzhou Industrial Park by The Brotherhood Press  Read More →