June 24, 2017


by Ryan Ong

THERE is a slight schizophrenia regarding Fintech in Singapore. On the one hand, we’re the sort of people who will walk three blocks to throw a candy wrapper. We like well-defined rules, and Fintech is inherently disruptive to the rules. On the other, we like to complain we’re not innovative enough, and really want to do something about it. So the regulatory sandbox proposed by the Monetary Authority of Singapore (MAS) is a nice compromise between these two conflicting impulses. Now, new Fintech companies will be allowed to disrupt as much as they like – within a fixed space:

by Ryan Ong

INSURANCE is like the spleen, or the pineal gland. No one except a handful of specialists can explain in detail how it works, but we all know it’s important. For the longest time, insurance was a thing you bought because everyone said it was important, and you kind of hoped the payout would be there when you need it. It’s also a huge, clunky industry burdened by middlemen, paperwork, and asymmetric knowledge (more on that below). Industries like that invite disruption from the Internet:

by Ryan Ong

CONTRACT workers and freelancers have been called “the new pioneer generation“. But at the same time, Deputy Prime Minister Tharman Shanmugaratnam has expressed misgivings about the “gig” economy, in which contractors rather than employees fill often temporary roles.

While it’s clear there’s no winding back the clock (it’s largely impossible to just remove the gig economy, without setting Singapore back by decades), the gig economy is set to cause a split. Some will see it as a form of progress that should be mainly left alone, while others will demand greater government intervention.

by Eugene Toh

THIS time, the problem isn’t the same as what happened in the global financial crisis of 2008.

That crisis was a “sudden shock” to the economy. The economy was doing well – until it wasn’t. High growth was seen in the two years that preceded it, in 2006 and 2007. Inflation was at an all-time high.

What about today? Latest figures show that the economy contracted in Q3 this year – by 4.1 per cent compared to the previous quarter. It will be a technical recession if we have two consecutive quarters of negative growth, but we don’t need the next quarter’s data to tell us that the economy is doing badly.

The difference is, we are not facing a sudden shock this time.

Growth has been slow since 2014 and has only continued trending downwards. The problem has been eating away at us but we don’t feel that bad since it is progressive. Unemployment has been slowly rising, with resident unemployment hitting 3 per cent in June, the highest in five years.

The economy is facing multiple problems and there are no quick fixes. Which means it may be time for some drastic action to be taken.


How did we get here?

The first problem lies with the weak global growth affecting our trade. On a year-on-year basis, our non-oil domestic exports had fallen by 4.8 per cent in September.

This problem was likely made worse from the recent events in European Union and the United States. Brexit derailed the financial markets because investors were not certain about the negative repercussions on the economy from UK’s withdrawal from the EU.

The US presidential elections may have the same impact on financial markets, especially if investors do not take it favourably that the economic climate will likely remain stable in the hands of either candidate.

Both candidates have actually stated that they were not in favour of the Trans-Pacific Partnership (TPP) which could affect Singapore’s trade prospects if the deal does not follow through.

A major difference this time, however, is that China is slowing down as well.

China’s slow-down and its move away from exports-led growth has pulled down regional economies like Malaysia and Australia, because it doesn’t need their commodities as much as before. Without China motoring at full speed ahead, there is little else to “counter-balance” the weaker advanced economies.

Who’s buying anything? Hanjin shipping, one of the world’s largest shipping companies has already gone bust. This has partially to do with the slow-down in demand for shipping services. The crash in oil prices tell a similar story of the global economic slow-down.


Labour pains

The other problem we have is a tight labour market since unemployment is only 2.1 per cent. The tight labour market is a demographics problem. Singapore faces an ageing population and there are three ways to address this. We could (1) increase birth rates, (2) import more foreign labour, or (3) try to increase our productivity.

We have been trying to increase birth rates, but our Total Fertility Rate (TFR) is still nowhere near replacement levels. Since we are no longer amenable to bringing in vast numbers of foreign workers to supplement the workforce, that leaves growth in labour productivity.

“Productivity” has been a buzz word since 2010 but it is not easy to increase labour productivity. It is a long and painful process which may not always yield results all the time.

In some years, we actually see negative labour productivity growth in spite of the policies implemented. The negative productivity growth in some years could be due to the pains from restructuring.

This is a painful process because restructuring is neither straightforward or quick. Firms can possibly take quite some time to do so, and this could lead to fall in labour productivity during experimentation.

But even with the slow productivity growth, we’ve had increases in median wages at a rate higher than recent economic growth. So firms have to absorb these higher costs without being able to pass them on due to the weak economy. This makes doing business here more challenging and makes us less competitive.

Singapore has always been very opportunistic in “riding the wave”. We have been able to achieve phenomenal growth like we did in 2010 because of our swift ability to attract investments and expand production when the economy recovers.

If we continue to tighten the foreign labour inflow, however, firms may not be in a position to maximise the benefits from an economic recovery. It is no longer an acute infection which we can cure with a Resilience package, like we did in 2009 which had policies like the Jobs Credit Scheme.

As Prime Minister Lee Hsien Loong said on Tuesday in a closed-door dialogue with 300 labour movement leaders: “It’s not an infection that can be cured with one course of antibiotics, but something that we have to work at over the long term.”

Indeed, this has been a slow acting disease and we will soon start to feel the painful effects. The G has been propping up demand with public infrastructural projects, which has helped with growth in the construction sector, but this alone is not enough.

We cannot possibly keep throwing money at the problem. Perhaps some bitter medicine is in order.

Foreign labour force growth largely powered Singapore’s economic growth over the last decade. Could we perhaps loosen this tap a little and allow for some flexibility and let firms capture the opportunity when the economy starts to recover?

Could we take the same approach with foreign labour? Ease the tap for a two- to three-year period, with an intention to tighten it again at a later stage?

Our problem with the inflow of foreign labour was that it was too fast, too furious. We could approach the foreign labour issue the same way the G approaches the budget. The G is allowed to within its four- to five-year term in office, utilise surpluses generated within the term to finance deficits that happens within the same term.

Could we take the same approach with foreign labour? Ease the tap for a two- to three-year period, with an intention to tighten it again at a later stage?


A cold solution

If not, another option would be to increase productivity growth to match wage growth. But can productivity growth play catch up? We know that economic restructuring can’t be rushed. If the drive to boost productivity growth doesn’t pan out the way we expect it to, then it leaves us with the only last option: freeze wages.

The National Wage Council last recommended a wage freeze in 2009. That was probably not too hard for workers to accept since there was the crisis in 2008. With this “special disease”, however, is the fear and pain enough for people to be willing to accept a wage freeze?

Another place to look at in terms of wages would be to reduce employers’ CPF contribution rates.

Historically, Singapore has always been willing to take very drastic measures to cut employer CPF contribution rates – like when we cut employers’ CPF contribution rates in 1985 by 15 per cent. That could be considered as a stop-gap measure to maintain competitiveness, but for it to be useful, this has to be in place until productivity growth can fully catch up with wage and economic growth.

The reduction in CPF contribution rates should not be an arbitrary number, but the difference between labour productivity growth and economic growth rates. This, of course, will not an easy pill to swallow either.


Bitter but better

Will the G, the nation’s doctor, prescribe such bitter medicine for its people? And will the people understand why such medicine is necessary?
The G can choose. It can present the solutions to the public and insist that the bitter medicine has to be taken. It may even prescribe other “medications”, such as its multi-billion dollar Industry Transformation Programme launched this year, for short-term pain relief.
But to cure the economy of its current disease, it will need something stronger.
Eugene Toh is a Singapore Management University student completing a Masters of Science in Applied Economics. He can be reached at his websites, www.tuitiongenius.com and eugenetoh.sg.


Featured image by Sean Chong.

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by Ryan Ong

ARE you sick and tired of money? Do you think employment sucks? If so, I have great news for you. On the other hand, readers who have made unfortunate life choices – such as being an adult with responsibilities, a mortgage, and a preference to feed their offspring – might want to get a paper bag and some anxiety medication. You see, Singapore’s shipyards have started to grow quiet. And when a port city’s shipyards grow quiet, that’s a sign that the next import is a whole bunch of layoffs.

Singapore’s quieter shipyards: what’s the deal?

Our shipyards have lost the flood of foreign workers that totally non-racist Singaporeans like to complain about. That tends to happen when major oil companies cut back on projects, which has happened due to the slump in oil prices.

Due to a global oversupply of oil and shrinking profits, oil companies are no longer interested in activities like exploration drilling.  Their scale-back started as early as mid-2014, but the sheer amount of cost-cutting only started to hit home in January 2015. At the time, Royal Dutch Shell raised eyebrows when it cancelled the Al Karaana project, a multi-billion dollar oil effort with Qatar Petroleum.

As oil prices continued to stay low, more companies followed suit. British Petroleum (BP), for example, has abandoned its $1.06 billion exploration of the Great Australian Bight, which is just one “L” short of an appropriate name had BP gone ahead.

This is bad news for Singapore’s shipyards.

Singapore is big on building equipment for oil and gas companies. In fact, Keppel is widely recognised as the world’s largest builder of offshore rigs. Singapore is especially noted for the construction of the jack-up rig, which is used to drill for oil in shallow oceanic waters. In July this year, Sembcorp Marine even delivered the world’s largest jack-up rig (that’s not a sign of recovery, the rig was ordered and put into construction long before the plunging oil prices).

So to be clear, we’re major players in an industry that’s taken a massive hit. Sembcorp Marine for example, delivered eight rigs in 2014 and reported a profit of $560 million. But in 2015, this had fallen to just one rig delivered, with a reported loss of $290 million. Keppel, which has seen its revenue fall by 37 per cent year-on-year, was expected to deliver 15 rigs in 2015. However, only seven were delivered, as Keppel’s customers requested delays.

In addition to the low demand for rigs, Sembcorp and Keppel both also produce drill ships and semi-submersibles, which are used in exploration drilling. With their major client Sete Brasil, facing financial difficulties, it could lead to defaulted payments of over $10 billion.

But this is where the money problem only starts, and it’s begun to spread.


From the shipyards to the banks

Overseas Chinese Banking Corporation (OCBC), United Overseas Bank (UOB), and the Development Bank of Singapore (DBS) are the three largest local banks. All three of them are the main lenders to the oil and gas industry, and all of them are starting to suffer from the oil industry’s problems.

The latest incident was the default of Swiber, an oil company formerly valued at $50 million. Swiber is now in liquidation, and DBS may only recover half of the $700 million owed to it by Swiber. But DBS is not the only bank sweating about the oil and gas situation.

According to the Financial Times, UOB’s loans to oil and gas related companies are around $9.3 billion, or about four per cent of its loan book (the loan book refers to the record of all the loans owed to the bank). DBS has loans of about $17 billion to oil and gas companies, or about six per cent of its loan book.

Those percentages may seem small, but they’re not insubstantial – most of the assets banks have come in the form of money owed to them (banks only retain a small fraction of all the money deposited in them), so defaults in the billion dollar range are a serious issue. On top of that, we’re likely to see further defaults in the coming year, unless oil prices can climb significantly.

In addition, the worry is not just about Non-Performing Loans (NPLs). There’s also the issue of the banks being able to make money, by issuing new loans. With the oil and gas industry scaling back, there is less demand for bank loans, and hence less opportunities for banks to earn off the interest.


From the banks to your pockets

Singapore’s other main business, besides oil and gas, is its finance sector. Now it’s unlikely that our finance sector is going to collapse on the basis of oil and gas industry issues alone – the situation is worrying, but not yet critical. It’s like that moment when you bend your ankle in a funny way, and it’s sore but you’re not entirely sure it’s broken yet.

But it does mean that the finance sector can’t expand, and that aggressive downsizing may be on the horizon. This has certainly been the case worldwide, due to a weak global economic outlook (oil prices are only one part of the problems facing us, next to economic slowdowns in China, Brexit, and rising political tensions). Singaporeans in the finance sector have already voiced worries about potential layoffs.

Should mass retrenchments occur in banking, it will contribute to the glut of older Professionals, Managers, Executives and Technicians (PMETs) who have been laid off. In 2015, Singapore had over 15,000 layoffs, a number not seen since the financial crisis in 2008/9, and PMETs made up the bulk of these.

Looking beyond the banks, we also need to consider how insurers are affected. Singaporeans who depend on Investment Linked Policies (ILPs) for their long term retirement, for example, may find their sub-fund sinking in light of the oil and gas situation. Banks are not the only entities to purchase bonds issued by oil and gas companies – insurers may also have done so.

Likewise, Singaporeans with mutual funds, or accredited investors who have been convinced to purchase bonds in oil and gas companies, will be impacted. For example, relationship managers in private banking convinced some Singaporeans to buy Swiber bonds, potentially wiping out a few retirement funds.

What we’re seeing are the beginnings of a serious financial problem. The oil price slump is not recovering fast enough, and as a country we’ve found ourselves heavily invested in two sectors (oil and gas, and finance) that are facing difficulties.

At the very least, the average Singaporean will now have a harder time planning for retirement: it’s hard to decide where to put your money, when interest rates are low yet markets are volatile. The woes already visible in our shipyards may soon be creeping further inland.


Featured image by Sean Chong.

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by Suhaile Md

THE job market is tough. For a lot of people who are not sure where to find work, you can try the National Jobs Bank, which is getting a re-vamp of its own. The portal will soon evolve to become a “one-stop and non-stop” marketplace for employers and job-seekers – but exactly how this will happen is still a question.

Still, we thought it would be good to take a look at what’s on offer – since there are supposedly more than 60,000 available jobs at any given time. Currently, about 25,700 employers are registered on the portal, with around 180,000 job seekers registered. On average, the jobs bank receives about 7,000 job applications daily, according to figures released by the G.

Here’s what we found: There are over 70,000 vacancies on the Jobs bank. Postings by employers can have single or multiple vacancies. Overall, there were more than 24,800 job postings. These postings can be up for only a month.


The various job categories on the jobs bank homepage.
The various job categories on the jobs bank homepage. Image is a screenshot of the jobs bank homepage.

The jobs are broadly categorised into 41 groups, according to industries like manufacturing and hospitality, or into professions like engineering and accounting.

The information technology sector has the highest number of jobs with 5,762 posts. Followed by Engineering which has 3,758 posts. On the other end, the entertainment and legal sectors have the least number of jobs with 112 and 171 posts respectively.

We drilled deeper into the postings. We wanted to find out what the majority of employers in the Jobs Bank were offering in terms of employment type and salaries. Also, what qualifications were most sought after?



Employment Type
Create column charts


First up, employment type. 

We used the website’s search function to look for jobs based on employment type only. Some employers are open to multiple types of working arrangements for the same role. A sales-person for example can choose to work either full-time, part-time or even on a contract basis.

An overwhelming majority of job postings were for full-time employees. Of the 24,000 plus postings, 19,915 were open to full-timers. 

The 1,189 posts on part-time roles tend to be administrative jobs, service crew and customer service oriented. Although there are some technical roles like graphic designing. 

Permanent jobs refer to both part-time and full-time. For instance, an administrative assistant who only needs to come into work twice a week could be considered a permanent part-time employee. We found 9,277 permanent positions but it’s not clear how many of these are full-time or part-time.

Sometimes employers only need staff for a specific period, six months for example, to clear a higher than usual volume of work. That’s when they hire contract staff. There were 5,498 such postings. 

The opportunities for temporary work, freelancing and flexi-work are far lesser with 519, 363, and 337 posts respectively. 



You can also search for jobs based on qualifications alone.

Of all the postings, 8,516 require a diploma. As for degrees, 11,965 of the posts require them. These two types of qualifications formed the bulk of the postings.

In contrast, 6,716 posts accept candidates who have less than diploma qualifications. Clearly, having at least a diploma or a degree goes a long way towards employability.

Going beyond a degree to get a post-graduate diploma, master’s or even a doctorate may not necessarily mean more jobs though. Just over 1,330 posts require post-graduate qualifications. That’s a small number compared to the 20,481 postings for diploma and degree holders.

Doctorates are required for research fellowships and a smattering of faculty positions at universities. Most fellowships pay between $4,000 and $5,000. Faculty positions pay considerably more.

Nanyang Technological University for instance, is looking for to fill an Associate Professorship at the School of Chemical and Biomedical Engineering. Successful applicants can expect to be paid up to $17,000 a month.

There’s a wide salary range for those with a diploma or a degree depending on experience and job responsibility.

Most diploma holders can expect to make between $2,000 and $5,000. This can go close to $10,000 in some senior engineering roles if they have 15 years of relevant work experience. Graduates usually make between $3,000 and $6,000.

Managerial roles, which require at least eight years of experience, pay $8,000 to $10,000. Some senior roles, which tend to require 15 years of experience, pay upwards of $15,000 per month.

There’s an eclectic mix of roles that don’t require any formal qualifications: software developer, delivery drivers, masseuses and technicians for example. A software developer can earn about $8,000. But then again it’s a specialist skill, certified or not. The rest tend to be paid between $1,600 to $2,000.





Our third and last search was for postings based on salary range.

We found that an overwhelming majority of jobs pay below $10,000. So keeping the upper limit at $10,000, we divided it evenly into $2,000 ranges to compare the number of jobs that fall within each salary category.

Over 22,100 postings pay between $2,000 and $6,000. This is double the 10,993 posts that offer a salary between $6,000 and $10,000.

Not surprising since most employers are looking for diploma and degree graduates. The median income of a diploma holder is $2,500 and that of a degree holder stands at $3,300 according to graduate employment surveys. Furthermore, the number of management positions shrink the higher you climb the career ladder.

The highest salaries in the jobs bank are, as expected, at senior leadership roles. For example, an Asia-Pacific regional sales manager role pays $190,000 a year. Which is about $15,800 per month. You can even make up to $20,000 a month as a research engineer. Of course, such roles require relevant work experience.

On the other end of the pay scale are part-time roles that pay by the hour like events promoters and temporary administrative assistants. They tend to pay $7 to $12 by the hour. Over 4,000 job postings have no salary specified.


Featured image is a screenshot from National Jobs Bank homepage.

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by Ryan Ong

ON SEPT 21 this year, Minister in the Prime Minister’s Office Chan Chun Sing said at a Singapore Business Federation (SBF) event that: “Like a dynasty, they (owners of family-run companies) believe they will hand the business to their sons or daughters and they take a long-term perspective. Paradoxically…many companies that are on the stock markets increasingly take a short-term perspective“.

With regard to family businesses that are Small to Medium Enterprises (SMEs), there’s a lot of proof behind what the minister says. In fact, SMEs often form the “base” of a young economy like Singapore. Many of Singapore’s success stories, like Mohamed Mustafa and Samsudin Co Pte Ltd (owners of Mustafa Centre), and B.P. de Silva (owners of Risis), remain family run.

But a “dynastically” run company poses a range of hazards once it becomes a giant, multi-national corporation. At that point, things often become morally hazardous and questionable; almost as bad as allowing a family to run a country. The recent shake-up at Samsung is a prime example.


Samsung and the Chaebol model

Samsung is one of the “big four” chaebols (family-run conglomerates) in South Korea. The other four are Hyundai Motors, SK Group, and LG. In 2014, Samsung and Hyundai Motors accounted for more than one-third of South Korea’s entire GDP. The running joke that South Korea should be called the Republic of Samsung still makes the rounds in business board rooms, despite being over two decades old now.

Chaebols are family-run to an extreme, and keep the trappings of a family-run mama shop despite being multi-national entities. They are, in other words, corporate governance nightmares. In 1997, during the Asian Financial Crisis, chaebols were a major contributor to Korea’s problems: a combination of opaque business practices, along with incompetent management, led to large government bailouts.

Later in 2001, there were investor group protests when Samsung’s Chairman Lee Kun Hee appointed his son, Mr Lee Jae Yong, as a successor.

Investors pointed out that the younger Mr Lee had barely worked in Samsung, even if he had been on the payroll for 10 years. Samsung denied it was nepotism: it wasn’t Mr Lee’s fault, because he had to study abroad shortly after joining the company. Also, Samsung’s vice chairman at the time, Mr Yoon Jong Yong, said that Mr Lee had been “dropping by the office from time to time“.

Because Samsung’s employees apparently live in a Dilbert comic, things went the only way they possibly could. Under the leadership of Mr Lee Jae Yong, who wanted to get the jump on Apple’s iPhone 7, engineers were rushed to release the Samsung Galaxy Note 7 on time. It was an explosive new development, although not the in the way Samsung intended.

Samsung’s Galaxy Note 7 was part of its flagship line of smartphone, and was Apple’s largest competitor worldwide. Even before its release in August this year, the phone had a record-breaking 200,000 pre-orders in South Korea. But just a month later, Samsung launched a voluntary recall based on reports that the phone was catching fire. Samsung recalled 2.5 million phones, which cost the company to lose an estimated $19.4 billion in market value. Despite the recall, the replacement phones continued to catch fire. This led to Samsung to suspend further sales, and eventually to stop production altogether.

This isn’t a situation where people were just “picking on the leader”. A Wall Street Journal reports that, unlike his father, Mr Lee was distant from daily decisions regarding the phone. Samsung’s senior management had decided to rush production of the phone to compete with Apple. While it’s uncertain if Mr Lee agreed with the decision, his lack of intervention stands out.

(Although you probably shouldn’t think Mr Lee is horrible as a person, given that he’s pushed the company to give two years’ paid maternity leave to employees).


Even if the heirs are competent, are they interested?

Even if a family-run business can lead to the occasional poor leader, it should have sustainability. A long held argument is that, because family members are invested in ways a traditional employee won’t be, family businesses are more survivable. But that’s proving to be untrue in some situations, one of which is directly relevant to Singapore.

In 2014, a report by Forbes stated that family-run businesses in China were starting to face challenges. The report mentions that less than 30 per cent of family-run businesses are successfully passed to the second generation, and less than 14 per cent successfully make it to the third. What the report neglects to mention is that this isn’t rooted in money issues, but the willingness of heirs.

Chinese businesses are facing succession problems, with children uninterested in the businesses of their parents. In the linked report, it’s noted that 65 per cent of heirs of manufacturing businesses don’t want to carry it on. Their parents probably worked their way up sewing dresses or making pipes or some such goods, and industries like those aren’t terribly exciting.

Small family businesses in Singapore face a similar issue: if you make a living selling duck rice, and your son is educated in an ivy league business school, odds are his career dreams won’t involve helping you hack up poultry.


The “longevity” of family run businesses is culturally dependent

According to new research, most firms don’t survive after their owners die. More importantly, the research shows that family firms do not fare significantly better than non-family counterparts, when the owner dies. A common factor is that sales will drop by around 60 per cent, and headcount will fall by around 17 per cent.

This is at odds with the notion that a family-run business has more longevity. But it might make sense if we consider that the oldest family run businesses are all strangely concentrated in Japan. Kongo Gumi, the world’s oldest construction business which closed down in 2007, was 1,400 years old. That’s not a typo – they were doing business when Lord of the Rings would have been considered science-fiction.

Certainly, family-run businesses last longer in the east than in the west. But before we jump to the conclusion that Singapore’s family-run businesses are “eastern” and hence long lived, we should recognise that we’re a very globalised city-state. The notion of following entirely in a parent’s footsteps have become alien to many of us. How many Singaporeans still join a profession just because that’s what their parents did?

Given our succession issues, it’s likely Singapore will see family-owned businesses, rather than family-run businesses. While families may keep the name of a company, and retain majority control, it’s probable that later generations will outsource control to professional managers.

Perhaps that still counts as “surviving”.


Featured image by Sean Chong.

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by Ryan Ong

BACK when I studied marketing and advertising, each form of media had its own rules and its own specialists. Print advertising was for technical products (like computer specs, which you have to refer to and read), while outdoor advertising was all about location (you always put up banner ads near traffic lights, where people will stop and read it). Most businesses would concentrate on one or two “main channels”, and make flighty, half-hearted efforts at the rest. Now that’s set to change:

by Ryan Ong

INDONESIA has declared tax amnesty, in an attempt to retrieve some of the S$340 billion hidden abroad by its wealthy. According to the Indonesian authorities, 80 per cent of that money is hidden in Singapore. These hidden tax dollars can take many forms, ranging from precious metals bought and kept in Singapore, to owning property. This is where the complexities arise – if Indonesia reclaims that money, it could mean financial upheaval for businesses here (particularly the lucrative wealth management sector, which many rich Indonesians pay to manage their assets). There’s a real possibility that Singapore could lose out, if Indonesia’s wealth decide to cash out and bring their wealth home.