April 28, 2017


by Ryan Ong

BUSINESS survival is usually measured on a sliding scale of how many bad cheques your boss writes you. Once you get three in a row, you know the corporate vision of a DIY vasectomy kit in every home is doomed. You see, no matter how smart a business idea seems, or how much it could pay off in the long run, it’s the near-term support that matters for everyday survival:

earth by Kevin Gill

THINK that murder mysteries and assassinations are confined to the pages of an Agatha Christie novel? Think again, as fact is stranger than fiction. From alleged Kremlin death plot and attempt on the Libyan Prime Minister’s life to North Korean agents attempting to recover Kim Jong Nam’s body by sneaking into the Kuala Lumpur morgue, this week’s news is thick with blood and political intrigue.


1. Kuala Lumpur, Malaysia – Attempted break-in at morgue holding Kim Jong Nam’s body

Image from Facebook user Johan Manus.

On Tuesday (Feb 21), merely days after Kim Jong Nam was assassinated by two mysterious women, Malaysian police detected an attempt to break into the morgue where Mr Kim’s body was being kept. Police presence at the morgue has been stepped up. Police chief Khalid Abu Bakar claimed that authorities knew the identity of the break-in suspects, but refused to go into detail as to whether they were North Korean.  He said, “We know who they are. No need to tell you (the press).”

The break-ins, however, have intensified speculation that North Korea is behind the assassination. North Korea has repeatedly tried to foil Malaysian attempts to investigate the murder, calling for the immediate release of the two “innocent women” who were arrested in connection with Kim’s death. The isolated nation has refused to even acknowledge that the dead man was Kim Jong Nam, and has accused Malaysia of conducting a politically-motivated investigation to gain favour with the United States and South Korea.

North Korea-Malaysia relations have soured in light of this diplomatic spat. On February 20, the North Korean ambassador was summoned by the Malaysian government, while the Malaysian ambassador to North Korea was also recalled. This story is still developing.


2. Moscow, Russia – Kremlin has denied allegations of Montenegro assassination plot

Image from Wikipedia Commons
Image from Wikipedia Commons

Montenegrin Special Prosecutor Milivoje Katnic accused Russia on Sunday (Feb 19) of involvement in an alleged conspiracy to assassinate the Montenegrin prime minister, Milo Dukanovic, in October last year. Russia has strenuously denied any such claims.

Dmitry Peskov, a spokesman for Russian President Vladimir Putin, said in response: “These (are) absurd accusations … We do not interfere in the internal affairs of other countries, including Montenegro.”

These allegations come as Sergei Lavrov, Russian foreign minister, criticised NATO for being a “Cold War institution”. Russia has pointed to the expansion of NATO membership as a key reason why relations have soured with the West and even annexed the former Ukrainian territory of Crimea in 2014 in response to the toppling of Russia’s ally and then-Ukrainian president Viktor Yanukovych.

The planned Montenegro coup, scheduled for Oct 16 last year and foiled only hours before its execution, was a blatant attempt by Serbian and Russian nationalists to deny the pro-NATO and pro-EU Montenegrin Prime Minister from retaining power.

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3. Tripoli, Libya – Libyan PM survived attack on convoy

Image from Facebook user ALGERIA PRESS SERVICE.
Image from Facebook user ALGERIA PRESS SERVICE.

On Monday (Feb 20), a convoy carrying the Prime Minister of Libya, Fayez al-Sarraj, fell under gunfire as it was passing through the Abu Salim district of Tripoli, the capital. Also among the convoy were Supreme State Council head, Abdel Rahman al Swehli, as well as the commander of Presidential Guard, Najmi al Nakou. They were travelling in armour-plated cars and were unharmed.

However, statements regarding casualties do not tally. The Times of Islamabad reported on February 20 that Mohamed Salem, a spokesman for the Supreme State Council, said two guards were wounded. At the same time, Ashraf al Thulthi, a spokesperson for Mr Fayez’s administration, was reported as saying that “there were no injuries”.

The assassination attempt was a sign of how fragile Mr Fayez’s reign is. Libya has been existing in political turmoil since 2011, with the armed uprising against and death of its dictator Muammar Gaddafi. Subsequently, the Libyan government developed into two rival divisions, one with its seat of power in Tobruk and the other, in Tripoli. In late 2015, the United Nation backed an agreement to form a Government of National Accord, with Mr Fayez at its helm.

Investigations into the identity and backer of the assailants are ongoing.


4. Mugla, Turkey – 47 people accused of plotting to kill President Erdogan have gone on trial

Image from Facebook user Movie Box Office Colection & Celebrity News
Image from Facebook user Movie Box Office Colection & Celebrity News.

In Mugla, a province of Turkey, the trial of 47 assassin-suspects has begun on Monday (Feb 20) in the Chamber of Commerce and Industry’s conference hall. These 47 have been accused of targeting the Turkish President Recep Tayyip Erdogan during the failed coup attempt of July 15, 2016.

That night, a section of the Turkish military took to the streets of several major cities with tanks and air bombardments in a coordinated attack. The president was staying in a hotel at the port town of Marmaris then. Fifteen minutes after he left the premises, the hotel was bombed. Meanwhile, loyalist soldiers, police forces and thousands of ordinary citizens resisted the coup after news spread via social media. After a few hours, the government was able to declare victory.  However, at least 248 people died and around 2,200 were wounded.

According to the Turkish government, the mastermind of the coup attempt was Mr Fethullah Gulen, a businessman and influential Turkish preacher on self-imposed exile in the United States (US) since 1999. Mr Gulen has denied any involvement and remained in the US.

Al Jazeera reported that the chief prosecutor of the trial, Mr Necip Topuz, has described the case as “historically important” since it is the only coup-related case where the president is the plaintiff. The trial is expected to last through the year.


5. Manila, Philippines – Duterte accused of ordering journalist Jun Pala’s death

Image from Wikimedia Commons.
Image from Wikimedia Commons.

A former police officer from Davao City in the Philippines has accused President Rodrigo Duterte as the mastermind behind the killing of a journalist, Jun Pala. Mr Duterte, who was then the chief executive of Davao City, allegedly founded the “Davao Death Squad” in 1988 and ordered the killing of criminals and troublesome political enemies.

On September 6, 2003, Mr Pala was gunned down by two men on a motorcycle while walking home from work. Mr Duterte denied involvement in the killing, but he also claimed to know who was behind Mr Pala’s death. Mr Pala had clashed with Duterte on many occasions – one of which involved Mr Duterte’s positive relationship with the New People’s Army (a communist insurgency), while Mr Pala was reportedly part of the Alsa Masa, an anti-communist group accused of human rights abuses in the 1980s.

As president, Mr Duterte has endorsed the killing of corrupt journalists and stands accused of waging a bloody war against drug gangs and peddlers in the Philippines.


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8:30am alarm
8:30 am clock face

FINALLY, the PUB has given some answers on the cost of producing water. What was so difficult about that? Does it think that big words such as “resilience”, “sustainability” and “water security” are enough to move people to accept a 30 per cent hike in water price? Or is it waiting for the Committee of Supply debate on the budget of the Ministry of Environment and Water Resources to unveil the figures? In this day and age, it’s not good to let speculation and discontent fester, simply because they can be spread so much faster via the Internet.

So what do we know now? In response to queries from the MSM, it said that in 2000, it cost $0.5 billion to operate the water system. In 2015, it was $1.3 billion. The money was spent on NEWater production, desalination, used water collection and treatment, and the maintenance of the island-wide network of water pipelines, among others. It did not say which contributed the most to rising cost, although one guess would be desalination plants.

PUB also said that from 2000 to 2015, it invested $7 billion in water infrastructure, and it expects to spend another $4 billion on such infrastructure from this year to 2021. What water infrastructure? Presumably the NEWater and desalination plants that are in the pipeline.

ST reported that besides the cost of producing water, it’s also getting more difficult to distribute water. PUB, for instance, can no longer just dig trenches to lay water pipes underground because the country is so built-up. It has to use pipe-jacking, a more expensive method which involves assembling pipes into shafts and then pushing them into position with a hydraulic jack.

In our heart of hearts, we probably know that it’s time for a rise in water prices, especially since it was last raised 17 years ago. The question is why now and why this much? Minister of State for Finance Lawrence Wong said there is never a good time for water price rises, which is true.

But a hiatus of 17 years?

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CIMB economist Song Seng Wun said at a forum yesterday that the fact that “we are finally charging a bit more for water after 17 years reflects that somebody forgot it hasn’t been done yet”.

Going by what experts say, the 30 per cent rise isn’t good enough. It should be way higher, like doubled. Say this to the people though. At forums on the Budget statement yesterday, the water price was a key issue, which is probably to the G’s chagrin since it wants to bill the Budget as a tool to shift the economy into high gear.

Although the argument is about water security (read: what if we get no more water from up north?), the price rise is also to add to the G’s coffers, which is increasingly under strain.

Now before you get your hackles up because the G is “rich”, consider what the experts have to say about the Budget.

Maybank Kim Eng economist Chua Hak Bin was reported in ST as noting that despite projecting a small overall fiscal surplus of $1.91 billion for the 2017 financial year, the G is looking at a primary deficit of $5.62 billion, worse than it was during the 2009 financial crisis.

A primary fiscal deficit does not take into account investment contributions from GIC or Temasek Holdings, and broadly implies that tax revenues are not keeping up with government spending.

He might as well add we can always tweak the formula on investment contributions, but that would be cheating, won’t it?

Economists are asking for more transparency in accounting and even the setting up of an independent agency to look at the effectiveness of G spending.

They have a point: We’ve seen so many announcements about millions and even billions on this or that G scheme over the years but what have they resulted in so far?

Finance Minister Heng Swee Keat made no bones about the need to raise revenues, especially since he has ordered G agencies to trim their budgets. So far, he has only talked about making non-GST registered companies which do cross-border businesses here pay the tax. That means the likes of Taobao and Amazon and e-retailers.

But if the G wants to persuade people to part with more money, it has to do better at telling people what things cost. It can start with this: What in heaven’s name is “long-run marginal cost of water supply”, the formula which underpins water prices?


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by Elvin Ong

THE Committee on the Future Economy (CFE) report was released on February 9, 2017. It will serve as the guiding document for Singapore’s economic restructuring and growth over the next five to 10 years. Many commentators have since provided excellent analyses of the report, including former Member of Parliament Mr Inderjit Singh, research fellows at the Lee Kuan Yew School of Public Policy (LKYSPP) Mr Adrian Kuah and Mr Hawyee Auyong, LKYSPP don Mr Donald Low, as well as Business Times associate editor Mr Vikram Khanna.

Here, I share my approach in my reading of the report. First, I read the report against the grain and in between the lines to assess whether and how the thinking behind the CFE has changed as compared to past committees. Second, I approach my analysis from the perspective of the political economy of advanced capitalist societies. This perspective privileges institutional analysis – in particular, the relationship between social-welfare policies, the structure of the labour market and overall inequality.


Positive changes

I found at least three positive changes from past committee-lead attempts to provide new directions for Singapore’s economy.

First, in Prime Minister Mr Lee Hsien Loong’s reply letter to thank the CFE for its work, he noted that: “We will take a hard-headed, pragmatic approach. When results are promising, we will vigorously pursue them. When a scheme does not look like it is going anywhere, we must have the courage to cut losses.” Similarly, on page 15, the report suggested that the government “will take an adaptive approach, continuing strategies which are successful, discontinuing those which are not, and making major changes where necessary.”

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These statements are particularly noteworthy. As I have examined elsewhere, billions of dollars have been poured into various schemes such as the Productivity and Innovation Credit with negligible impact. Instead of improving productivity, they have been subjected to systematic abuse.

Moving forward, the Singapore government can and should grow its capabilities to implement and monitor the results of its various schemes more rigorously. This means civil servants having the wherewithal to admit that they were wrong in pursuing certain policies, and to shut down programs if they fall short of their targets or are not in the public’s interest. Clinging on to sacred cows to “save face” should no longer be tolerated.

Second, throughout the report, the CFE emphasized that there was no one-size-fits-all solution to economic restructuring. Instead unique solutions will have to be tailored to various industries to help firms to restructure and upgrade, such as the Industrial Transformation Programs for the various sectors already identified.

Such a recognition is consistent with recent plans, and is a decisive break from the past. Silver bullets and grand schemes such as tax incentives that apply to all individuals and companies no longer work. A sectoral approach that identifies the specific needs of an industry and its unique solutions for different firms reduces deadweight loss, enhances monitoring and compliance, and builds solidarity.

Third, on pages 4 and 15, the report emphasised that the 7 strategies articulated in the CFE report are mutually reinforcing. Each strategy complements one another in the overall pursuit of restructuring, just like how different pieces of a jigsaw puzzle come together to form a nice picture.

This is also a refreshing perspective that is different from past committee reports. For far too long, haphazard public policies proposed and implemented have been orthogonal with one another, generating conflicting incentives for firms and individuals to restructure and upgrade. It is imperative that both macro- and micro-economic policies pull everyone in the same direction moving forward. Of course, the devil lies in the details. Claiming that the strategies are mutually reinforcing does not necessarily mean that they will be mutually reinforcing.


Understandable silences?

Many commentators were understandably surprised that the report was silent on a whole host of issues. Macroeconomic assessments, social policy, and foreign talent were conspicuously absent from the report. Why did the CFE, billed as one of the most inclusive committees ever, keep silent on these important topics?

Therein lies the clue. I think that the report was silent on these issues precisely because the CFE was so inclusive. Ironically, the more inclusive the process, the greater the struggle for the prioritisation of different ideas, the greater the impulse to find the “lowest common denominator” areas of agreement and to pave over the differences among competing groups. If we see the report as the outcome of a three-way fight of ideas between the government, the private sector, and workers, the result was a draw. What we have is an apolitical report that suppresses and avoids all the most important political questions.

Take tax policy for example – one of the most politically sensitive issues for the Singapore government. Three paragraphs on page 63 of the CFE report is all there is to say for it. The conclusion is that Singapore tax system must remain both “broad-based, progressive and fair” as well as “competitive and pro-growth.” It does not say how we should proceed if these two principles are in conflict with each other.


The politics moving forward

Singapore’s Budget for 2017 has been unveiled on 20 February. Analysts will have to examine it closely for clues on how the government has decided on the treacherous politics of Singapore’s future economy. Two political problems, both related to skills upgrading, are most pressing – the question of foreign manpower, and social security.

On the question of foreign manpower, the key political problem is the trade-off between the desire to keep Singapore open to foreign talent (CFE Strategy 1) and the need to build up Singapore’s pool of deep skills with good jobs and good wages for locals (CFE Strategy 2). This is a vexing issue for both entry level jobs, and senior management roles.

At the entry level, if firms can easily hire an engineer with “deep skills” for cheap from overseas, why would they bother to recruit and train locals? There is also no incentive for firms to participate in the numerous on-the-job training programmes with our institutes of higher learning. The rewards of a fully trained and competent Singaporean worker take months and years to realise, while the benefits of a highly skilled foreign worker are instantaneous.

At the senior management level, why would Singaporean workers care to upgrade their skills, if they know that they will not be rewarded with higher wages or promotions by their employers who can easily import senior management from overseas? It is not that Singaporeans workers do not care to engage in life-long learning. It is that they are systematically dis-incentivised from doing so.

For social security, the trade-off is between the desire to keep spending on social policy low, and the related costs and risks needed to build up deep skills. Learning deep skills is an expensive and risky pursuit. Who is going to pay for the learning process? What if companies close due to a global economic downturn, and workers with deep skills who lose their jobs are too expensive to re-hire? Who pays for prolonged unemployment? Furthermore, if workers with deep skills in one industry need to change their vocations to another industry, who pays for the re-training? These are just a small sample of the tough questions that require decisive political answers.



I do not think that we should despair at the lack of new ideas or unaddressed questions in the CFE report. To be sure, it may genuinely reflect the limits of top-down thinking among our top policy-makers as many commentators have alleged. But I would also suggest that it reveals the stalemate between competing groups who have varied interests and preferences, and the government’s reluctance to politicise the report and upset these groups.

Moving forward, it is inevitable that the government will have to confront, rather than sidestep, the political questions that over-shadow the economic restructuring process. Some questions, such as social spending, will be easier to tackle because of the fiscal headroom that the government has. Others, like the foreigner-local workforce ratio, will be unavoidable. How the government decides will be a function of the need to appease the demands of local and foreign capital, versus the countervailing pressures from the mass electorate in future general elections.


Mr Elvin Ong is a PhD candidate in Political Science at Emory University.


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by Daniel Yap

TWO op-eds on tobacco in the run-up to Budget 2017 caught my eye.

The first is one by the economist Mr Donald Low in the Business Times on Feb 17, calling for a “grand bargain” – an exchange of cigarettes for reduced-risk tobacco products.

The second is by Dr Chia Kee Seng, professor and dean at the Saw Swee Hock School of Public Health, National University of Singapore, and Dr Kenneth Warner, Avedis Donabedian Distinguished University Professor of Public Health at the Michigan School of Public Health, University of Michigan, published in Straits Times (ST) on Feb 18.

The two doctors called for an end to the scourge of smoking, pitching once again the G’s already-proposed measures of age limits, flavour bans and packaging changes as the way forward. These ideas are already being implemented by other nations.

Both pieces agree on this point – courageous action must be taken to mitigate the high cost of tobacco on our society. But do Singapore’s policymakers have the courage to save lives?

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Singapore’s tobacco policy of ever-higher taxation, bans and graphic marketing has not put a significant dent in the smoker population in Singapore over the last decade. Smoking prevalence has hovered between 12 and 16 per cent, with male smoker prevalence around 25 per cent.

One should note first that in Singapore, one-fourth of those below 18, the current legal age, had already tried smoking. It stands to reason that more laws will not stop this segment of curious youth from engaging in risky, illegal behaviour. And with the youth segment being the true “gateway” to smoking (a huge majority of smokers get hooked before the age of 21), it seems that more laws alone are unlikely to put a significant dent in the smoking rate.

The Health Ministry has set an ambitious target of 10 per cent smoking prevalence by 2020. It is admirable, maybe even attainable, but it is a big reach nonetheless. Dr Chia and Dr Warner pointed to New Zealand, Finland, Canada, Sweden and France as countries that have set a goal for a smoke-free society in eight to 23 years.

What is notable is that these countries, and many others at the forefront of the anti-smoking movement, allow reduced-risk tobacco products as a way for smokers to either quit or at least reduce the cost of smoking to society.

Singapore remains stubbornly behind the times in this area, maintaining a ban against reduced-risk products and constantly citing worry about a “gateway effect” where e-cigarettes, snus (chewing tobacco popular in Sweden and Finland), and heat-not-burn products would lead youth and non-smokers to pick up smoking.

Studies in the United Kingdom (UK) over the last few years, however, have shown that the gate swings almost uniformly in one direction: helping smokers quit (and typically become e-cigarette smokers) rather than enticing youth or non-smokers to “upgrade” to smoking. You can find the Department of Health’s findings published here.


Taking on some risks for greater good

That’s where Mr Low’s “grand bargain” comes in.

Based on the UK research, would it not be more prudent to lift the ban on reduced-risk products while at the same time clamping down on smoking tobacco? No doubt e-cigarettes are harmful to health, but this is a risk mitigation situation, much like how the G wants gamblers to put their money with well-regulated casinos or with entities like Singapore Pools and Singapore Turf Club, which will redistribute to social causes.

We must remember why we want to bring the smoking rate down: the health and social costs of smoking are high. If there is a way to reduce the costs by allowing alternative products, why not? Reduced-risk products can continue to be regulated and taxed as cigarettes currently are. And with alternatives in place, we can look to the other side of the “grand bargain” – cutting down on smoking, perhaps even to the point of banning it altogether.

It seems that harsher laws against smoking would be most effective in tandem with the availability of alternative tobacco or nicotine products, with a complete smoking ban as the end game.

Perhaps Singapore can lead the world in this area as well, and become a smoke-free nation by 2030? What will it cost us? Likely nothing more than converting smokers to lower-risk non-smoking tobacco and nicotine products. Courageous policy-making like this, I think, is the best care that this nation can provide for the long-term health of its smokers – and non-smokers too.


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Black clock showing 8.30.

DON’T expect the property market to change much after Budget 2017 and in the years to come. National Development Minister Lawrence Wong cautioned that existing property curbs will “stay for some time” and that Singapore has achieved a “soft landing” for the market with its measures – just the outcome it had been looking for.

The additional CPF housing grant announced on Monday (Feb 20) is also unlikely to have a significant effect on property prices, given that it is a buyer’s market and if sellers raise prices, buyers will simply move on to a better offer elsewhere. Volumes are expected to go up.

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Now is probably not the best time to ride your soon-to-be-expensive motorcycle into Malaysia. The trip back might be extra long as newly-deployed automated MBIKE customs lanes on the Johor side have malfunctioned for the second day in a row, causing hours-long tailbacks.

The Johor Immigration Department said that the breakdowns were caused by motorcyclists tailgating and damaging the gantries. The department also said that 38 motorcyclists had been detained for going through the gantries without providing their passports to the Immigration Department.

Coldhearted – some people are going around impersonating Singapore Heart Foundation volunteers, and armed with flag day stickers too! The Heart Foundation has made a police report about the miscreants, who were operating around Bugis Junction.

Bona fide Heart Foundation fundraisers are required to carry an identification badge and a copy of the Collectors Certificate of Authority issued by the National Council of Social Service, so if you’re in doubt, ask.

Heartbreaking – the body of hiker Steward Lee, reported missing by his family on Friday, has been found hanging at the top floor of multi-storey car park Block 468A Segar Road on Monday (Feb 20) night.

A widely shared appeal for information by his sister on social media kicked off a 70-man search through Mr Lee’s favourite nature reserves on Sunday. Police have classified the case as unnatural death and are investigating.


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by Ryan Ong

BUDGET 2017 doesn’t have much of a theme, beyond upgrade yourself really quick. There’s a huge sense of urgency in this budget, and it’s not hard to see why. The events of 2016, which range from Brexit to the election of Donald Trump to China’s growing assertiveness, won’t be good for us. And the only way forward is, ironically, to look backward:


New budget, old strategy

Budget 2017 is out, and it’s all about forward progress in the industry. But in another sense, it’s also about looking backward, and returning to the root of what made Singapore successful in the first place.

When Singapore (unwillingly) gained its independence in 1965, the situation it faced was quite similiar to today. There was tension in South East Asia, and a sense that the future was a total unknown. In order to run our economy, we focused on producing a highly skilled and educated workforce. Singapore powered through its first decades on the back of that principle: That the Singaporean worker was more productive, more driven, and worth a higher salary than neighbouring counterparts.

But over the last decade, we’ve begun to lose steam. Not too long ago in 2015, for example, Minister for Trade and Industry Lim Hng Kiang pointed out that some industries had to restructure quickly, as productivity goals were not being hit.

Budget 2017 seems to be going back to an old formula. In the face of growing uncertainty, all we can do is rely on the Singaporean worker being better. Better skilled, better adapted, and hopefully better paid for it. That’s not an easy thing to ask, because our success in the mid-60s can be attributed to us being South East Asia’s (arguably) best workforce at the time. But our neighbours have had a lot of time to catch up since then.

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Here are the three harsh things that the budget implies:


1. Get with the programme or get left behind

Over $80 million will be spent on helping on Small to Medium Enterprises (SMEs) go digital, under the Go Digital Programme.

About $100 million is for the Global Innovation Alliance and Leadership Development Initiative, which basically encourages Singaporeans to go abroad and work.

Some $26 million will go to the Lifelong Learning Endowment Fund and Skills Development Fund, to train workers in skills relevant to fast growing industries.

A recent comment I read on Facebook asked: Does this mean we want a painter to become a programmer? The answer is yes. Budget 2017 is part of a life raft the government is building for workers.

Remember that retrenchments were at a seven year high, within the first nine months of 2016. Many workers, whom we assumed to be highly trained, were precisely the ones who found themselves out of a job. When you have large layoffs despite a (in terms of paper qualifications) highly skilled workforce, that means workers lack relevant skills.

That’s due to the rising number of disruptive business models (e.g. Uber and its effects on the transport industry), which have forced companies to value different skill sets. It’s bad news for Singaporean workers in their 30s and 40s, who may find their qualifications – which they paid good money to learn – become useless.

Now consider the urgency with which the G is driving at this:

Budget 2017 allocates $1.4 billion to upgrading jobs and the economy. Prior to that, Budget 2016 and Budget 2015 saw the development of the SkillsFuture programme, and emphasised support for robotics and digital technologies. It’s pretty clear what the G’s rescue plan is:

They want Singaporeans to be the innovative ones who are doing the disrupting, not the ones losing jobs from the industries that are disrupted.  Singaporeans who refuse to take big risks, and won’t step out of their comfort zone to learn new skills, are shark bait. The G isn’t taking steps to protect dying industries, or playing at protectionist moves.


2. Businesses might pass on the water costs

Pass it on to you, the buyer, that is. The price of water is increasing by 30 per cent, starting in July 2017. It’s estimated that this will come to less less than $25 a month, for 75 per cent of businesses; although I’d contend we don’t know how many businesses there are, and 25 per cent of all businesses in the country is still a huge number of businesses.

It wouldn’t be unreasonable to guess that certain businesses – such as laundromats or restaurants – will be hit much harder by rising water costs than others. Now the purpose of the hike is to “raise awareness” of the importance of water, because without the government doing that none of us would know we’d die without it. But businesses tend to react to price hikes in two ways:

One, the G could have “raised awareness” of the importance of water, and businesses take steps to cut back. Or two, businesses could just factor the costs into their pricing. So we may see more places charging for water, higher prices at laundromats and car washes, higher costs on canned drinks, and so forth.

Now I’m not totally against the government’s intentions, by the way. I’m sure they just want us to waste less water, because over-consumption is the result of cheap supply. But it would be just as easy to set a water cap, and then impose a fine on over-consumption. And have some way to notify the household via text message when they’re nearing the water use limit.

Why punish those who have been conscientious about water use?


3. Carbon taxes can mean higher costs to consumers

I like to think most of you aren’t reading this from your ivory-backed chairs, while eating fried Pangolin and resting your rhinoceros-horn water on a coaster made from an endangered tortoise. Like most of you, I’m entirely for carbon taxes.

I’ll even say it’s an admirable and gutsy move: after the Trump election, I expected our pragmatic government to pivot in the other direction, and abandon environmentalism. We have financial inclination to do so, since Singapore has deep penetration into the oil and gas sector.

Nonetheless, from 2019 carbon emitters will be charged $10 to $20 per tonne of greenhouse gas. As with the water situation, businesses can go either way. Some might try to cut down on emissions, but some will try to pass on the costs to consumers. Knowing what big corporations are like, we’d better get realistic and plan to spend more.

On a related note, diesel will be taxed at 10 cents per litre. Cars pay $100 less annual diesel tax, and taxis pay $850 less. Diesel is more environmentally friendly than gasoline, so hopefully transport businesses will consider moving in this direction, rather than raising prices.


Budget 2017, along with the last two budgets, seem to be a polite way to remind us the clock is ticking.

Last year may have been the tipping point, in the way the global economy has changed. Stragglers who can’t adapt to the new economy are trying to fight back, by electing governments that impose protectionist measures.

But Singapore hasn’t got the luxury of doing that – we’re too small, and too vulnerable, to play the isolationist game. It’s clear we’re not catering to those who can’t adapt; that’s what all these expensive incentives are about. The clock is ticking, especially for those who refuse to re-skill and upgrade.


Read the first part, Economic Realities: 3 harsh takeaways from the Committee on the Future Economy, here.


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Morning Call, 0830, clock

EVERYBODY is probably talking about the new price of water, which is why MSM seems so keen to make sure people get the big picture of Budget 2017. So words like “[positioning] Singapore for the future” and “a Budget for today – and tomorrow” are headlines being splashed.

It’s too bad because the key thing that will blow people’s minds will be the water price and what it means for their pockets. Never mind the hefty rebates that will cover the increase for lower-income households. In fact, rebates, including GST vouchers, have become a standard feature of Budget announcements. People notice what they will have to pay more for – not what they will ACTUALLY be paying.

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Nevertheless, plenty of commentators are trying to cast the Budget as forward-looking and necessary for volatile times, except for the business sector which described the measures as “underwhelming” and “disappointing”. It’s true that there isn’t much respite for businesses beyond extension of corporate tax rebates. There’s nothing on rentals and fees, for example. Then again, it’s the job of the business associations to always ask for more, whether they get more or less, no?

The Budget, coming after the Committee for the Future Economy report, lacks specifics. People ask about the measures to transform the economy. It’s already in place, in fact. These are the Industry Transformation Maps for sectors.

They draw up ways to get the whole sector, such as hotels and retail, to do things differently. This means that if a player with deep pockets comes out with an innovation, he should share it, or there could be joint research into technologies. G agencies could also help bring the sector to international trade shows. Twenty-three sectors have been targeted and six have already been implemented.

Not new, you say? Yes, it was announced in the last Budget and will be expanded. What’s missing in almost every Budget statement is a report card on how past initiatives have worked out. Prime Minister Lee Hsien Loong and Finance Minister Heng Swee Keat have both talked about discarding ideas which don’t work and being ruthless about it. But no one really knows what ideas have been dropped and what deserve greater expansion.

If you want to know about what’s in the Budget, read this: BUDGET 2017 is about YOUR budget getting tighter.


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Featured Image by WikiCommons user Sengkang. (CC BY-SA 3.0)

by Bertha Henson

I WONDER who writes Finance Minister Mr Heng Swee Keat’s speeches? It must be the same person who wrote the Committee for the Future Economy report because the Budget speech was full of “developing capabilities”, “innovation”, “internationalisation” and “digitilisation”. So here’s all you need to know about Budget 2017 – and some things to ponder:


1. WATER ^&R$$$&&&&###!!!!

Yup, water prices are going up – by quite a hefty 30 per cent. That means your household water bill will go up by up to $18 a month. Again, we’re told that it’s because of higher cost of desalination and NEWater, which industries will now have a new NEWater tax to pay. It’s a two-stage increase, this July and next July. Yup, it’s like the rise in Service and Conservancy Charges (S&CC) in People’s Action Party (PAP) wards, which will also kick in in two stages.

Maybe the Ministry of Environment and Water Resources will shed some light on how the cost of water production is calculated. Are you looking at your water bill yet? Can reduce water usage by 30 per cent?


2. THANKS but what will S&CC fees be?

Even if you can’t think about rationing water, there’s some respite for you, especially if you live in smaller flats. U-Save rebates will cover the water bill increase fully or partially. There are also S&CC rebates, again tailored to housing type. Nice, except that the PAP town councils haven’t announced the quantum of S&CC increase yet.

Doubtless, those in bigger flats will be kicking up a fuss about paying more from the middle of the year. Expect to hear more about the sandwich class who is neither rich nor poor.


3. DON’T pass it down…

A carbon tax will be put in place from 2019. This concerns industries rather than households; that is, power stations and such like. It’s between $10 and $20 per tonne of greenhouse gas emissions. Nothing was said, however, about the big boys passing the cost down to electricity users.

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4. GET a greener, cleaner car

Still, you can do your green part and save some money if you drive a “cleaner” vehicle than the polluter you now own, because incentives have been extended. So ditch the car and keep the money in case your utilities bill suddenly spikes…


5. BUT think twice about getting a fancy bike

Everybody who has been speculating about changes to Certificates of Entitlement (COEs) for cars and restrictions on private-hire car companies has got it wrong. It seems some people have been indulging in expensive motorbikes which have an Open Market Value (OMV) of more than $5,000. Every bike buyer will still pay an Additional Registration Fee (ARF) of 15 per cent of the OMV. Yet, if you’re eyeing a new motorbike with an OMV of more than $10,000, please note that the ARF will be set at 100 per cent of the OMV. Why, you ask? Since it doesn’t occupy more space than an ordinary bike? It’s not about road usage. It’s about making sure those who can afford to, pay more in taxes.


6. CARING for care-givers

If you’re thinking more social safety nets will be available, you’re out of luck unless you’re caring for disabled family members, dementia sufferers or those with mental health problems. More money is being poured into these areas in an effort to build an inclusive society. You’ll have to wait for details from the different ministries in charge.


7. $50 MILLION X 3 for sports

For those who have been grumbling about being unable to play football in your neighbourhood because there’s no field for hire, the G is expanding its Sports-in-Precinct Programme. Some $50 million has been set aside to promote community sports. Another same sum of money, spread over three years, will go towards building more Joseph Schoolings. And finally, the third same sum of money will be forked out by the G to match sports donations dollar-for-dollar. May the sports associations use the money well. Keep your fingers crossed.


8. RELIEF for businesses

If you’re running a business, the cap for Corporate Income Tax (CIT) Rebate has been raised from $20,000 to $25,000 for 2017. If you’re in the marine or shipping line, there’s no increase in foreign worker levy as announced. (No surprise since there isn’t much work to go around in this sector.) But if you’re in construction, you’ll definitely get more work because $700 million worth of infrastructure projects have been pushed forward to this year and next. Nothing comes free, however, and the foreign workers levy for construction will go up.


9. TRAIN yourself into a “future” job

There was nothing specific for those who have lost their jobs but there will be more on training. An “Attach and Train” scheme will be announced for sectors which have good growth prospects, but where companies aren’t ready to hire yet. Instead, industry partners can send people for training and work attachments. So it looks like you’ll get training on the G’s dime but you might not be guaranteed a job right after.


10. GET ready for more taxes

Mr Heng got pretty sombre as he reached the end of the speech to talk about the “sustainability of the fiscal system”. That is, do we have enough money to pay for what we will need in the future? Healthcare spending has doubled to $10 billion last year over the past five years. Then there’s the more-than-$20 billion investment in transport infrastructure in the next five years.

All ministries and G agencies have to adjust their budgets downwards by 2 per cent. Besides scrimping, we’ve got to get more money somehow, somewhere. How? He said countries have been re-looking at their GST systems to make sure local GST-registered companies don’t lose out to foreign-based ones, especially those which do a lot of business locally. So maybe the tax axe will NOT fall on us so soon…


Featured Image by Wikimedia Commons user Sengkang. (CC BY-SA 3.0)

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