Wednesday, June 18, 2008

Singapore Slung?

This is really not a posting about weaker Singapore exports, but I needed a starting pitch, so here goes:

Exports from Singapore in May fell the most in more than two years as shipments to the U.S. and Europe tumbled, highlighting the island state's exposure to weaker demand from Western developed economies.

The data come as Singapore's central bank has embraced a stronger currency to fight inflation; that policy tool might be causing unwanted harm to the important manufacturing sector.

Nonoil domestic exports fell 9.8% in May from April in seasonally adjusted terms, trade-promotion agency International Enterprise Singapore said Tuesday. The decline followed a 1.6% rise in the previous month and was wider than the 0.4% drop forecast in a Dow Jones Newswires poll of economists. May's contraction was the sharpest since January 2006. Shipments to Western countries were much weaker in May, and healthier demand from Singapore's Asian trading partners wasn't sufficient to keep overall exports afloat.

The Monetary Authority of Singapore has been a strong user of Singapore's currency to stop imported inflation. Collectively, compared to its neighbours in Asia, and even the British pound and Euro, the Singapore dollar had been kept remarkably strong over the last 2 years. Even in light of a sub prime crisis and a weaker US economy, Singapore has kept up a firm currency probably to help it deflect the viciously spiraling oil price from infiltrating the domestic economy.

Is Singapore going the right way?

The planners have basically restructured Singapore's economy to be of high value add type. Maintaining high land values with strong international projects. High land values bring forth high property values and thus further attracts high value add services and businesses, which in turn promotes high international salaries.

The trouble is that this formula benefits the top 10% of the population only, and at the same time marginalises the bottom 30% or so of the income ladder. The bottom half seemingly cannot afford to live in Singapore anymore. Its a fact. Singapore still has one of the highest percent of emigrants in the world. The intellectual government knows that, but is willing to let the go on their own accord - for the better good?

Singapore government basically, in their silence, is saying that they are really operating like a good professional company that happens to be a country. General Electric shaves the bottom 5% in terms of performance, i.e. letting them go, in order to bring in constant improvement to their people assets. Singapore looks to be doing the same.

What will Singapore be? Its like they are deliberately planning to be the Monaco of Asia. Where average income per capita will rise to the top 5 in the world. Where hotel rooms will average S$500 a nite for a 4 star and S$800 a nite for a 5 star. Where the Singapore dollar will one day match the USD one for one. Where the place will be so expensive that fellow Asians cannot afford to go visit - (gee, its happening already... examine your frequency in visiting Singapore for the last 12 months and compare that 5 years ago or ten years ago. I have shifted my vacation plans to HK and Thailand, its a lot cheaper and more fun). Where the place is populated and dominated by high value add industries. Where the young's best hope in owning a home is if their parents had left them something.

Be careful what you you wish for, cause when you get it, you may not like it.


Tony said...

who is going to do the low level jobs? waiters, shop assistants, cleaners etc etc.? imported labour from Indonesia and Malaysia who will commute to work daily cross-border or live in hostels? That is happening already to some extent. Becoming like the Emirates.

Raymond said...

Damn right! Singapore used to be a lot cheaper than HK just few years ago. But now.. will think twice before going there. It's more expensive, or at least on par with HK.

Sometimes I wonder whether they are progressing too fast, or we are lagging further and further behind.

Salvatore_Dali said...

tony, correct...

raymond, "Sometimes I wonder whether they are progressing too fast, or we are lagging further and further behind" - I think its a bit of both actually...

MP said...

you forgot to tell us who the ladies are LOL

Salvatore_Dali said...

mp, i think u r joking... but in case u are not... its sammi cheng

solomon said...

Whether Singapore is going upward in cost of livings or cost of spending. The paramount question is how about our country, Malaysia?

To me, at least Singaporean have some economic advancement so called. But, we are half way of them. Vision 2020 might not be materialised if the ongoing political struggle persist in BN or oncoming threat from Pakatan.

CAn our countrymen / politician have some quiet time? The more time you spend in all these affairs, we would be one step backward.....