A Year of Extraordinary Inflation - Singapore 2007

Another few more days, the year 2007 will come to an end. Examining issues from social media to our economy, Singapore seemed to have undergone a year in transition. Of course, the most significant aspect of the year 2007 is the extraordinary inflation which most Singaporeans would have experienced and complained about. While we see a strong GDP growth coming from foreign direct investment and high employment  mainly from the financial  sectors, we are also plagued with rising costs in the standards of living and adjustments (probably would be imposed in the coming years) to our daily lives, from CPF to healthcare costs. So, I list down and make some short comments in a random fashion (with no order of importance) on interesting events that passed this year of extraordinary inflation in Singapore.

1. En Blocs and Real Estate Fever: The real estate in Singapore is heating up rapidly this year. Since the Singapore government has commissioned Sands and Genting to build our two new integrated resorts (casinos), there is a strong surge of foreign investment into Singapore. Prices of condominiums and HDB flats have went up a result of demand. There is the rush from the real estate developers to make a killing in this new real estate fever. You start to hear en-blocs and how many people made money from the sale of their apartments. The trouble starts when those Singaporeans (who sold their apartments) realized that they have to be downgraded from condos to HDB flats. So, once again, short term thinking has taught a lot of people a lesson that being greedy does not pay. I definitely sympathize with those who don't want to get rid of their flats because they know that the intangible benefits of living in convenience outlasts the short term $100K gains.
2. If Casinos are not enough, there is F1 and Youth Olympics 2010: After the IMF and World Bank meetings in 2006, private high net worth individuals and the government have combined forces to bring the F1 Grand Prix to Singapore. It will be a night race and the claim that we are going to be the first. In any case, another interesting development is the bid for Youth Olympics in 2010. I personally support the bid, but muse to myself whether we will get another PR disaster like the IMF/World Bank meetings. Yes, a recent trip to the Venetician Macao casino in Macau and the view of the Cotai Strip have helped me to figure out Singapore's casino strategy.
   
3. The Ruling Party's Internet Insurgency:  Yes, they are here in the internet and completely change the doctrine of viewing people who are anonymous or use pseudonyms. The best quote of the year come from our member of parliament, Mr Baey Yam King, "The identity is not important. It is the message that is important." My conclusion is that the romance of three kingdoms has begun in the internet.
4. The Great Ministerial Pay Debate: Actually, to simplify the debate, are you for the case that we pay money for the best talent in all sectors including public service or people who serve in public service should not get high pay because of their service to the country? As an entrepreneur, I have no problem with our ministers or top civil servants getting high pay, except that I find that the benchmark of using GDP growth is too easy. At least, CEOs of big companies are measured with a lot of key performance indicators. Besides, our civil service was plagued with a string of unfortunate incidents: (i) the Auditor General's report which reported several lapses, (ii) Richard Yong slipping out of Singapore, (iii) the UNSW debacle, and (iv) Alfian Sa'at unaccountably terminated as a relief teacher. Back to the pay issue, the best solution is to come up with a formula that takes into account of consumer price index (with inflation to counter balance GDP growth) and unemployment rates. Actually, the situation can be less tense, if most of us see our wages increase and can cope with the rising costs of living.
5. Li Hong Yi Incident: I provided an autopsy to how this whole event transpired. Seriously speaking, it is an offence to leak any emails of such nature out to the public. It does breach national security. Still, it is a good social media case study for those who want to understand how internet traffic can grow at a tremendous rate by an event.
6. GST is now 7%: Well, the aim towards a cashless society has taken a turn with NETS increasing the transaction costs by 3 times. Even credit card transaction costs are cheaper. Still, 2% increase in GST is not a small matter. Here is how I tell myself not to be pissed off with the GST hike. Start thinking of the seven years living in the UK with a GST equivalent of 17.5%.
7. CPF and Annuities: In a rally speech centering on domestic issues, our prime minister has announced changes to the CPF and the possibility of introducing an annuities scheme. Some of my friends complained about retiring at the age of 67. Well, I never thought of retiring, given that I want to continue working or pursue my other interests in life and have a high paced and enjoyable career.
8. Gays and Section 377A: Seriously speaking, the issue reaches a stalemate with the conservatives winning the case that the law is not repealed, and with the gays hearing from the Prime Minister that the government is not going to enforce the law and treat it as a ceremonial signpost. It reminds me of the light touch policy that the government is adopting for the bloggers in cyberspace. Honestly, I like to see a more tolerant society.
9. GIC buys stake in UBS while Temasek guns for Merrill Lynch: Thanks to the US subprime mortgage crisis, a lot of investment banks together with the war in Iraq dragged the US economy down with a weakened US dollar. Hence, we got the opportunity to buy up stakes in investment banks. Seriously speaking, the state-owned investment funds will face continuous scrutiny from the public and nothing much can be done about such a complex issue. With no doubt, it is a good deal to buy UBS. You give UBS 11 billion and get 9% return (as interest payments) every year.
10. Singapore towards First World?: With the political reality in Singapore, we are further than closer to become a first world nation. Anyway, talks of merger with Malaysia turn up again, but I prefer Singapore to become a city state. Still, we need some effort in our media press. The only thing which I am still concerned is the tipping point when the government's selective liberalization approach will finally break down.

Whatever the case, as a Singaporean, I hope for a better year ahead. So, have a happy new year.

Comments

[dysgrace]

UK VAT of 17.5% - yes, but look at what they (in theory) get out of it: heavily subsidised education, healthcare and pension schemes. What, precisely, does the 7% GST pay for?

[The Void Deck]

Hi Bernard

Also something on 2007, Singapore's handling of the Myanmar issue was dismal in 2007 from a foreign image angle and it undermined whatever brownie points Singapore had scored in the international arena over the years. Whether the cost to Singapore's image is a small one or one that lingers it is too early to tell yet.