TR EMERITUS

Reading about the recent take over of Credit Suisse by UBS and the collapse of Silicon Valley Bank (“SVB”) brought back memories to the time when I was doing some work for GE Commercial Finance (“GECF”), which was in the business of trade credit financing, which is better known as factoring. GECF were clear that their main customers were SME’s. It was, on paper, a very viable partnership. GECF was part of the GE empire, and it argued that it understood the needs of business (specifically manufacturing) and helped finance other business from that view. GECF also argued that it didn’t just sell financial products but also provided knowledge of best practices based on its experiences (GE, was at the time consistently ranked as one of the best run companies in the world) There were however, some cultural clashes between GECF with its roots in the USA and our local, predominantly Chinese-run, SMEs. This was summed up by GECF’s commercial director who told me, “We check their books – there’s no debt – you got to have debt to do business.” If my former father-in-law was anything to go by, traditional Chinese businessmen detest debt. His biggest issue with me when I took the PPO out against his daughter, was that made it look like he owed people money. When I look back at this moment, I realise that there is a clear difference in culture. In the American system, debt is part and parcel of the game of doing business. It should be no surprise to anyone that America, which remains the favourite place for the world’s entrepreneurs, has also been the birthplace of the most creative forms of financing and American bankruptcy laws were at one stage considered among the more lenient in the developed world. The rational behind this, is fairly simple. If you want your business to make a big mark, you to expand quickly and this would require capital, which more often than not would be at a quantum beyond your current turnover. Hence, an entire industry was born to take care of this need. American bankruptcy laws were, to extent, based on the premise that one might have run into a spell of bad luck and should not be condemned for it. Back when the Old Rogue first entered my life, he would consistently point out that one could be making money but then run into a spate of bad luck or make a bad decision. Bankruptcy was designed to help you get through that period rather than to punish you. By contrast, the local SMEs in Singapore and the widder Southeast Asian region came from a different culture. Small businesses struggled to get loans from banks, which more often than not, were pushed to loan to politically connected competitors. The only funding available to traditional SMEs was through informal channels, and while legal contracts regarding loans were opaque, there were informal understandings to ensure that the said loans for repaid. Furthermore, an SME business in the region didn’t just face financial risk. With the exception of Singapore, Southeast Asia’s SME sector has been dominated by the ethnic Chinese minority, which has, as the 1997 riots in Indonesia showed, been part of the wrong end of angry mobs. Hence, you operate in such circumstances, you do so with the understanding that a business failure is not just a financial failure but potentially deadly for you and your family. If doing business in America is about getting a passion to market and getting rich, doing business in Southeast Asia was the most part all about having enough money so that you would always have a survival route in case your homeland turned nasty. You avoided things like unnecessary debt because it could cost your business and by extension you. In a way, both sides have a point. Southeast Asia’s SMEs generally don’t expand beyond the region. Local businesses play things close to their chest. However, as the collapse of the various American banks has shown, there is also the other extreme. While America remains the place where minnows like Apple and Microsoft grew into trillion-dollar whales, there have been several periods where things went overboard. Lenders got greedy and thought the basic laws of economics didn’t exist and businesses made marketing gimmicks to attract venture capital instead of producing a product or service. Hence, when crashes came, they really crashed. So, one has to find the equilibrium. Yes, one should aim to grow one’s business. Sometimes it is necessary to take on debt. Reality is that bills do need to get paid even when customers take their own time (trust me, I’ve seen it happen in the construction industry). However, one does need to understand that loans need to be repaid and that there needs to be a delivery of sorts. Markets do go south as much as they do go north. We should not, as a society reward greed when things go wrong. If you don’t punish greed, you allow people to get away with the same mistake and that has never benefited anyone other than to live the definition of insanity of doing the same thing over and over again and expecting different results.   Tang Li *Although I’ve been based mainly in Singapore for nearly two decades, I’ve had the privilege of being able meet people who have crossed borders and cultures. I’ve befriended ministers and ambassadors and worked on projects involving a former head of state. Yet, at the same time, I’ve had the privilege of befriending migrant labourers and former convicts. All of them have a story to tell. All of them add to the fabric of life. I hope to express the stories that inspire us to create life as it should be.      Read More →

Young gig workers need educating on harsh realities of platform work, say researchers of 'in-work poverty' - Today's online, 29 March 2023. I cannot agree with the findings of the researchers more. The pap government is definitely too slow to act in protecting them. They have no sense of urgency to act on this one. Gig economy and gig workers are fancy names but the realities for gig workers are far from rosy. Many of them are young, hardworking and attracted by the flexibility, by rhetoric such as the more you work, the more you earn lalala... and many of them being young and energetic, they forget that the opposite is also true. Delivery riders are easily spotted on the roads from morning to late night but for many of them, their incomes do not commensurate with their hard work and the long hours that they put in. A research conducted by the Institute of Policy Studies Social Lab concluded that the median income for delivery riders is just $1925/. It is, in a few words, a hand to mouth job with little room for career advancement and income growth and to put it bluntly, young people seriously shouldn't waste their lives away doing it. I quote from the research, 'once you stop your hand, your livelihood is jeopardised'. I will even go as far to say that it is a waste of our limited national manpower even. I accept that the gig economy is a new trend and for the government to starve platform companies of workers deliberately through legislation is too high handed. The current work practice of gig workers left much to be desired. Time is limited, their energy level is limited, compulsory CPF contribution is zero, health, insurance, annual leave, fringe benefits and sick leave are all zero and more...It is a race to the bottom type of job. I would like to suggest that the government looks into gig work and all related matters with urgency and with a view to better protect gig workers. I further suggest that the government limits the number of Singaporeans that platform companies can employ but liberalise the employment of foreign gig delivery riders to meet their demands. Think.   Simon Lim      Read More →

Social Media was full of talk yesterday about the glaringly disparate reception given by the Chinese government to Anwar Ibrahim, Lee Hsien Loong and the Spanish PM, Sanchez when they arrived in Beijing yesterday from the Boao conference in Hainan, which all three of them had attended. Both Anwar and Sanchez were given the red carpet treatment upon arrival with honour guards and State cars on the tarmac, waiting to whisk them off,accompanied by a phalanx of outriders. Lee Hsien Loong and his 50 strong entourage were ushered onto the airport buses to be taken to the arrival lounge. There may be a reason for the disparate reception, but Zaobao and Mothership gave a most ridiculous and disingenuous explanation for the difference in treatment accorded to Lee Hsien Loong and Anwar. It was suggested that the treatment was different because Anwar arrived in Beijing onboard a Malaysian Airlines plane, whereas Lee Hsien Loong arrived on a local plane- Hainan Airlines. I was in stitches and almost fell off my chair when I read the explanation given by Mothership. I thought this can’t be serious coming from the mainstream media and an alternative media which professes to be a serious and reliable source of journalism. There are “Rules of the Game”as Lee Kuan Yew liked to put it. We are all familiar with how visiting Heads of State are often given a 21-gun salute at the official welcoming ceremony. But I am prepared to say that the parameters of these rules are not etched in stone. If a country genuinely likes a visiting Statesman, there is nothing stopping the host country from giving the guests how many guns salutes it deems fit! It could be multiples of 21. It could be a gun salute every minute! The latter sounds extravagant, but I am using it to make my point. A person does not even have to be in power to be accorded a grand reception. I am reminded of the story of how Mao Tse-Tung sent an official plane and his Chief Protocol Officer to bring Richard Nixon to China for a private visit after Nixon’s resignation as President following the Watergate scandal. This was the unprecedented treatment accorded to a former President. The two men had, of course, been part of the most sensational diplomatic breakthrough in the 1970s, which was Nixon’s opening to China. In Beijing, following their private meeting during which they toasted each other with tea, Nixon was treated to an extravagant evening of musical entertainment with a program carefully put together by Mao himself. So please, Zaobao and Mothership, such disingenuous explanations are not appreciated by intelligent Singaporeans.   Lim Tean      Read More →