TR EMERITUS

Has Rishi Sunak's UK become a third world country? From economy to road and prisons- everything is in shambles. Is it then surprising that in a latest polls the Tories are behind Labour by 30 points? What does this mean for Sunak's future?    Read More →

Vladimir Putin has taken oath as the president of Russia for a fifth time in an elaborate ceremony at the Grand Kremlin Palace. The inauguration follows Putin's victory in the recent presidential election, where he secured 87% of the votes. In his inaugural address, Putin offered talks with the West, but "only as equals". For nearly a quarter of a century, Putin has ruled Russia as prime minister and president. Under his rule, Russia's economy has stabilised and its great power ambitions are back in play. But has the war in Ukraine spoiled Putin's calculations? What is Putin's legacy in geopolitics?    Read More →

The mainstream media likes to paint a glowing picture of the US-Singapore Free Trade Agreement (USSFTA) - that Singapore has benefited enormously from it, be it trade, employment, technological advancement, even national security. However, there are many downsides for Singaporeans that it will never mention. For consumers, the clause on Intellectual Property Rights (IPR) has been the most damaging. By signing the treaty, Singapore has accepted a regime to stringently protect the IPRs of American companies including severely punishing people who infringe their patents, minimizing generics and banning parallel imports, extending patent durations, lowering the bar to grant patents, over and beyond what is required by the World Trade Organization (WTO). The result is that prices of medicines, chemicals, software, movies, music, branded merchandise and any product that has some new intellectual component, have become extremely expensive because these companies will charge what we can bear given that the government has surrendered our bargaining power. Other ASEAN countries, all of which did not sign an FTA with the US, have managed to keep IPR products reasonably priced because they did not undertake to limit their access to generics, to ban parallel imports or even to refrain from overriding a patent in the interest of the country. In 2006 and 2007, the Thai government issued compulsory licenses, ie, used existing patents without the permission of the holder but with reasonable compensation, which is permitted under WTO rules, to produce cheaper drugs for heart disease and HIV, as the original drugs were too expensive and patients were dying as they couldn’t afford them. Ironically, prior to 1898, when the US finally became a net exporter of patents, they took the view that all new inventions belong to the human race, and copying was par for course, as did the Japanese and Chinese until they became net exporters of patents. Are Singaporeans and Singapore companies anywhere near being net exporters of patents? If not, why roll over and expose ourselves to vultures? Of course, big investors and land owners, especially Temasek has benefited enormously from the influx of intellectual property companies into Singapore, including pharmaceutical companies. Another troubling issue in the FTA is the clause to eradicate capital control. Thus Americans can invest in or divest Singapore assets at will, so that asset prices here, especially property, has been inflated beyond the means of Singaporeans each time the US government prints more money to support its spending or to bail out failing US companies. From 2008 to 2015, the US central bank (Fed) printed about 3.5 trillion USD. To put it in perspective, that’s about 3.5 times what it printed in the first 95 years of its existence! Then in the two years from 2020 to 2021, it printed north of 5 trillion USD to fight the Covid pandemic and its fallout, which is more than 5 times what it printed in the first 95 years of its existence! The inflation that people all over the world is experiencing now is due, in no small measure, to the profligate behavior of the US government. Inflation, at the end of the day, is always a case of too much money chasing after too few goods. The effect on property is most obvious. Shortly after the 2008 Global Financial Crisis, property prices here increased sharply, because, as mentioned earlier, the Fed printed 3.5 trillion dollars and some of those money found its way here. Then, shortly after Covid, around 2022, property prices here again began to increase sharply, because the Fed printed north of 5 trillion dollars in the preceding two years. Some of those money found its way here because Singapore is a safe haven and the USSFTA commits Singapore to the free transfer of capital, unimpeded by regulatory restrictions. Worse still, the Singapore government’s effort to put a lid on skyrocketing property prices by imposing a 60% Additional Buyer’s Stamp Duty (ABSD) on foreigners was compromised by the USSFTA because some smart negotiator had agreed to grant the Americans National Treatment, ie, same treatment as Singaporeans, with regards to investments, including property, which should have been carved out, given how land scarce we are. Thus Americans, like Singaporeans, do not have to pay ABSD for their first property here. This special treatment is exclusive to the Americans and members of the European Free Trade Arrangement comprising Switzerland, Norway, Iceland and Liechtenstein. Fortunately for us, that short-sighted clause has been carved out from the other 25 FTAs that we have signed. Not surprisingly, Americans are now the top foreign buyers of property here, having leapfrogged the Chinese as ABSD increased. Now that inflation is rearing its ugly head and causing voters to be unhappy, the Fed is raising interest rates to absorb the excess money. If interest rates remain high long enough, and all other relevant factors remain constant, we shall be seeing asset prices making a sharp reversal, causing much hardship to Singaporeans. But having signed the USSFTA, we have little means to protect ourselves from the reckless policies of the US government. Another area of concern is workers right and the environment. Although the USSFTA purports to uphold workers right and protect the environment, it is toothless to uphold those principles, because it cleverly leaves the final say on the matter to the Singapore government, which has been soft in the face of investor demands. It is therefore no coincidence that we are having more and more foreign workers and professionals here to ensure that wages are “competitive” and that workers are insecure so that they will work hard. The government’s call for work-life balance is nothing short of hypocrisy. Incidentally, the USSFTA has a clause that does not limit the number of American professionals into Singapore but limits Singaporean professionals into US to 5400 a year. Given that we are a Little Red Dot and the US the largest economy in the world, shouldn’t the arrangement be the other way round? Which negotiator agreed to this ridiculous clause? According to the Straits Times, since the inception of the USSFTA, trade between the two countries has tripled from US40 billion in 2003 to US120 billion in 2022. However, much of it accrues to US MNCs rather than Singapore companies given that there are 6000 US companies here and only 400 Singapore companies in the US. Thus although trade has increased, a lot of the profits are repatriated to the US. Also, it is debatable how much of the increase in “trade” is due to the internal transfer of parts of an MNC, from Singapore to the US and vice-versa, taking advantage of the zero-tariff of the FTA, as part of supply chain management. On paper, such movement of parts are recorded as trade, but in reality, it is just movement of inventory, which, nonetheless takes up valuable resources here which could have been put to better use, given that Singapore is so small. Thus, although trade has increased, the opportunity cost to Singapore is very high because the overwhelming presence of US companies here taking advantage of the USSFTA has made it difficult for Singaporean companies to compete for resources to grow their business, given that they are considerably smaller, less sophisticated and are financially weaker. Besides, foreign MNCs are usually given attractive incentives to invest here. Is it any wonder then that we have not produced any noteworthy company since the signing of the USSFTA in 2003? The mainstream media states that “to date, the deal remains the US’ only FTA with an ASEAN country”, as if Singapore is very lucky to have signed the treaty with the US or that it is the only country worthy enough to sign the treaty. Nothing is further from the truth. After signing the North Atlantic Free Trade Agreement (NAFTA) with Mexico and Canada, the US was eager to impose a similar trade blueprint on ASEAN. After Singapore, they thought the rest of the ASEAN countries would follow suit. Malaysia and Thailand entered into negotiations with the US, but soon found that the deal was disadvantageous to them, among other reasons, and pulled out. The other ASEAN countries noted that the US is far more powerful than them and that any trade treaty would be lopsided and thus wisely did not enter into any negotiations. I thus cringe every time Singapore ministers or Singapore ambassadors unabashedly rehash the story of how then-PM Goh Chok Tong maneuvered then-President Clinton to a game of golf in Brunei in the wee hours of the morning and got him to agree to start negotiations on the USSFTA in 20 minutes, as if the US were all along nonchalant about the FTA. In all probability, the US was very keen to get Singapore locked-in into a treaty, especially the draconian terms pertaining to intellectual property rights. Although the mainstream media likes to paint a rosy picture of the USSFTA, the reality is more nuanced. Investors definitely are having it good since the treaty protects their rights. However, for the majority of the population, the effect has been less rosy, even detrimental. Worse still, the treaty has tied our hands, and thereby compromised our sovereignty.   Foong Swee Fong    Read More →