TR EMERITUS

While Singaporeans are caught up in bedroom escapades of amorous members of parliament, several international events have taken place recently, each on it’s own, portends bad tidings, taken together, is a terrible perfect storm brewing, whose impact will be felt in every country in the world. Jul 7 - Black Sea Grain Agreement terminated Ukraine is the granary to the world and ships its grains out at its port at Odessa. This port is crucial because it is Ukraine’s largest port with silo facilities for grain and is capable of handling Panama class vessels. When the war with Russia broke out, Ukraine’s access to the world by sea was effectively cut as Moscow controls the Black Sea. This triggered severe global food security and exacerbated an already ugly inflation brought about by Covid pandemic and the Russo-Ukraine war. The agreement, brokered by EU, was signed in Jul 2022 by Ukraine, Russia and Turkey which kept Odessa port open and the grains flowing again even as the warring states were bombing each other. Turkey was involved because maritime route goes through Boshorous Straits where Istanbul is. Turkey is responsible for inspecting the vessels to prevent arms shipment going through. On Jul 7 this one year agreement expired. Ukraine asked for 120 days extension which Russia rejected. Russia has also rejected Turkey and EU’s request for 60 days extension. Of course the West go ballistic on evil Russians. Putin adamantly rejected continuance of the agreement can only mean the other side has not kept their part of the bargain, whatever that was. Who knows, perhaps Turkey was letting arms shipment through. We are back to square one. Ukraine’s major grain export is corn and wheat. So be prepared for surge in prices again. Wheat is not a staple food for Singapore, but as global consumers seek alternatives, inflation will kick in again. Jul 20 India bans export of non-Basmati rice I covered this in my previous blog. Straits Times regurgitated Western media that suggests India’s ban was an effort to bring prices down ahead of the coming 2024 election. I reasoned it was due to a conflict with World Trade Organisation that forced India’s hand to ban the export of rice. India is the world’s largest exporter of rice, accounting for 40% of the market or 22m metric tons. Who in the world can replace that extra 22m m/tons at short notice? To add to the woes, India’s rice is the cheapest in the world. The more expensive rice will simply become even more expensive. The biggest rice producer in the world, just slightly ahead of India, is China. The Chinese are self-sufficient in rice, but continues to be a net importer, buying about 4m m/tons annually. The speculation is China is building up a huge rice stockpile to beef up food security in an uncertain future. For the first time in 2019, China began buying Indian rice. Singapore's import from India forms only 17% of total rice imports. The authorities allayed fears, confident that Singapore's diversity of rice sources will see us through. Our rice comes mainly from Thailand, Vietnam, India and Cambodia. We also buy from Pakistan, Japan and Australia. Importers also lock in with forward purchases. Another short term measure is our rice stockpile which is adequate for 3 months. Singapore’s rice stockpile is unique amongst nations. There is no official stockpile. The government is smart to pass the burden to licenced importers. We trust there is reliable monitoring and stockpiles are in fact in place. However, forward purchases and stockpiles are good only for the short term. With a permanent Indian export ban, every importer in the world is going to be chasing the same diverse suppliers that Singapore has. India has said that they may still sell to some countries if they asked for it. In other words, a government-to-government arrangement. Has the Singapore government taken the early initiative to approach Indian authorities? El Nino El Nino is a climatic condition that brings warmer and drier weather to the Pacific part of the globe. It delays the monsoon rains and reduces precipitation to Asia and SE Asia which has a devastating impact on water hungry rice plants. Some years, El Nino brought much feared drought. This is terrible because 90% of the world’s rice is grown in these regions. This year, El Nino seems to come one or two months earlier. Scientists say early arrival is bad because this gives it time to grow in severity. This is extremely bad news for rice production this year. Fertilizers santion Agriculture needs fertilisers which could be nitrogen, potassium or ammonia based. The biggest potash producing country is Canada, second is Belarus. Western countries punish Russia with crippling sanctions. Sanctions extend to Russia's ally Belarus. The West has not been sympathetic to Belarussian appeal that a sanction on potash is going to hit global food production. We know Vivian Balakrishnan poked the Russian bear with sanctions. We don’t know if he is also aligned with the Western sanctions on Belarus. Jul 27 Fed raised interest rate Fed increased interest rates by 25 basis points. USD interest rate is now at its highest in 22 years at about 5.5%. This tightening has come even though inflation is slowing down. And worse still is the Fed has said another increase is likely in September. The increase in USD interest rate will see US exports its inflation all over the world and cost of finance cascades down to all goods and services. Imagine what 25 basis points can do to the cost of oil and you can understand its eventual impact. Aug 1 China impose export restrictions on Gallium and Germanium These are rare Earth materials. Gallim is used in electronic products and China produces 80% of world supply. Germanium is used in the making of chips. And China produces 60% of world supply. China claimed the export restriction is for national security reasons. China’s rare Earth export restriction is going to hit every electronic product you can name. Conclusion The cancellation of the Black Sea Grain Agreement and the Indian ban on non-basmati rice will push prices of 2 staple food produce of grains and rice to record highs. El Nino and Belarus fertiliser ban will cause further severe shrinkage of world agricultural produce. The increase in USD interest rate will raise cost of capital adding more pressure on businesses. China’s rare Earth export restriction is going to strangle the electronics industries and the digital world. Coming together at the same time, we are going to be hit with a sledgehammer of price increases in every product and services we use and consume. Inflation is going to shoot to heights never seen before. Will food and electronics production security drive nations into new conflicts? How prepared is Singapore? Like have we asked India for exemption from the rice ban? And while we are being hit by an onslaught of another round of price increases due to exogenous causes, the coup de grace for many Singaporeans will be the 1% hike in GST next year. A terrible dark winter is coming. Be afraid. Be very afraid.   Patrick Low * Article first appeared on Down The Rabbit Hole.      Read More →

Dear fellow Singaporeans, Happy National Day! In my 2023 New Year Message, I said that the political agenda will accelerate this year. It has indeed proven to be a fast-paced year politically judging from the breathtaking pace that events have unfolded this year, from the conclusion of the Keppel Offshore & Marine investigation, SPH Ltd’s false circulation numbers scandal and the Ridout Road investigation to the arrest of Minister lswaran and the resignation of Speaker Tan Chuan-Jin. Events this year should have awakened Singaporeans to the need to relook at our political system. Do we want to rely solely on the “good leaders” of one dominant ruling party or do we want to strengthen our political institutions to have stronger checks and balances in case the “good leaders” fail one day? As Parliament is the apex of our political system, this is the first political institution that we need to strengthen. I think it is long overdue for Singapore to have a strong check and balance mechanism in Parliament. To do this, we need to have an effective Opposition that controls at least one-third of the seats in Parliament, so that we can prevent the ruling party from amending the Constitution at will. Dear fellow Singaporeans, you have the power to decide as important elections are coming your way. If you dare to make the right decision at the right time, we can be confident that the best is yet to be for Singapore, and Singapore will continue to be a success story for our grandchildren and many more future generations. Singaporeans can do better. For Country For People.   Leong Mun Wai, Secretary General of Progress Singapore Party      Read More →

Dear Fellow Singaporeans, As we unite to commemorate our 58th National Day, we extend warm wishes to all. Today, we celebrate not only the progress of our nation but also the guiding values that shape our journey. Recently, a debate in Parliament centered around the necessity of an impartial and independent Speaker of Parliament. Advocating for an independent Speaker, particularly in a House dominated by People’s Action Party (PAP) MPs, is a cause we’ve championed consistently. We express gratitude to NCMPs Leong Mun Wai and Hazel Poa for echoing this motion. A Minister staunchly opposed the original motion, citing potential unlawfulness and limitations beyond what the Constitution prescribes. Predictably, in a Parliament dominated by the PAP, the motion was replaced with an amendment. Allow me to state plainly: having an independent Speaker of Parliament, detached from the PAP, is neither unlawful nor constraining. Of course, the Minister may reject the notion, just as Big Business might resist a ban on transporting human beings in lorries, deeming it restrictive and unfavourable. In another recent parliamentary discourse, the subject revolved around transporting foreign workers in undignified conditions within goods lorries. Fifty-three community groups in Singapore collectively demanded an immediate government ban on this practice. Red Dot United (RDU) has championed enhanced transport safety measures for migrant workers for over two years. We maintained that treating guest workers fairly and empathetically would symbolize to the world our esteem for human dignity. While Parliament conceded the unsuitability of lorries for worker transport, the Government failed to implement any new measures for their safety. The Government justified this stance, claiming “knock-on effects” on society including project delays and higher costs. In doing so, it sided with big businesses arguing that imposing a ban would hinder many companies from operating. At this significant juncture of National Day, it’s apt to ponder the leadership shaping our nation’s course. Leadership transcends solely economic achievements; it’s also about upholding core values that define us. Recent discussions on the moral landscape of our political sphere prompt reflection on the importance of ethical leadership. A nation’s progress isn’t solely dictated by economic indicators; it’s profoundly influenced by the ethical standards upheld by those in authoritative roles. RDU’s commitment lies in charting a path based on robust ethical values resonating with Singapore’s spirit. We staunchly believe in leading by example, manifesting our dedication to transparency, accountability, and respect in every endeavour. Moral and ethical leadership is the foundation of Singapore’s economic well-being. Upholding transparency, accountability, and integrity nurtures trust and credibility, fostering inclusive growth, inspiring innovation, cultivating a responsible business ecosystem and respect for all human lives. Ethical leadership, as championed by doughnut economics, encourages sustainable practices, curbs inequality, and fosters long-term prosperity for our economy and people alike. How can citizens place their trust in a political leadership teetering on the edge of moral decline, seemingly driven to preserve its power hegemony? In this moment of contemplation, let’s remember that the power to drive change rests within us. Collectively, we possess the capability to reshape norms and elevate leadership standards. Our goal isn’t to enforce rules even the rule-maker finds challenging, but to inspire transformation through our actions, reminding all that ethical leadership is more than a concept—it’s a living principle shaping our nation’s character. This National Day, let’s celebrate the potential we possess to carve a future filled with promise. United, let’s navigate toward a brighter tomorrow by embracing a resolute moral compass that steers us through challenges. As we celebrate Singapore’s progress, let’s envision leaders embodying the very values that have moulded our identity. Happy National Day, Singapore! Let’s continue our journey with unwavering commitment to ethical leadership, ensuring a future we can all proudly embrace. Warmest regards,   Ravi Philemon Secretary-General Red Dot United      Read More →