The Star Online > Focus
Saturday October 18, 2008
Rainbow at the end of the crisis
INSIGHT DOWN SOUTH
By SEAH CHIANG NEE
Singapore is confident that it can emerge from the current world financial crisis along with several others, including Hong Kong, Tokyo, Dubai and Shanghai, to form a new global financial bloc.
HOW do Singaporeans who have lived a sheltered life cope with the current recession and global dislocation? Answer: Surprisingly well!
Judging by the sentiments expressed both in the new and old media, this new generation appears to show a sharp awareness of the potential trouble.
If anything, the worries sometimes border on the exaggerated as though the end of world order is nigh, but most of the time Singaporeans are well-informed and realistic.
A Singaporean Web surfer sums up the preparatory mood when he says: “I will repeat, I will reduce and reuse, I will recycle and I will repair.”
“I will not buy on impulse, always buy one item less and save that extra dollar,” he adds.
“We are in very severe times. All are suffering.”
Another surfer says: “The downturn will come in waves and will last at least three years. Deflation may be on the card.”
The biggest victims so far are investors who have rapidly lost billions of dollars in stock and property trading and even on structured bank papers.
There are good reasons for Singaporeans’ preparedness. The SARS-induced crisis, for one, serves as a good teacher.
Another could be the frank, open reporting €“ and discussions of the bad news €“ by Cabinet ministers and the mainstream media, which surprisingly pulled few punches.
Thirdly, Singapore became the first major economy to fall foul of recession (the United States, France and Germany followed days later), and it signalled businesses to put in place budget-freezing or cost-cutting measures.
The Internet plays a fast information role.
“Every time I read the news, I could feel my hands going cold,” said a retired teacher.
“It would only show my life savings dropping by a few thousand dollars, or my daily necessities €“ like transport or food or utilities €“ becoming more expensive,” he lamented.
The crisis is making its way in almost every part of the economy - from exports to shipping, from financial services to tourism, and a whole lot in between.
Even Singapore’s tycoons are not spared.
According to Business Times calculations, 13 of the island’s richest men (and women) have lost €“ at least in value €“ more than S$6.7bil (RM16bil) since the start of the year. The report said: “They aren’t living hand to mouth just yet, but it must feel like it.” Each has lost almost 55% on average.
Another high-profile casualty is sports. The building of the S$1.87bil (RM4.46bil), 35-hectare Kallang Sports Hub, the biggest sports project, has been postponed for two years until 2012. The government had earlier postponed several large billion-dollar projects.
Consumer spending, which was very high only months ago, is declining.
With tourism also down, retail shops and restaurants have reported sales declines of 10% to 20%, and expensive Orchard Road is the hardest hit (down by up to 50%). Nightclubs are also feeling the impact of austerity.
So far, there have been no big retrenchments or pay cuts, but new employment is relatively low. Jobs will be the biggest concern of middle class Singaporeans and foreign professionals here.
Management graduate Hanees Mohamad told a reporter that she had been sending out an average of 20 resumes daily since she graduated two months ago, so far hearing from only half of them.
“I’m getting frustrated. I didn’t think it would be this difficult,” said the 24-year-old.
Company hardship, if it exists, is low-level and takes form of things like cheaper wines or no-frills executive meals. Financial institutions are, of course, the worst hit.
Banks have started to reduce expat packages or do away with allowances for spouses. Other firms are letting go contract workers and reinstituting multi-task duties.
However, this time around, Singaporeans have a better cushion against job losses.
With the general election coming in 2010 or 2011, the government has assured its citizens that, in an emergency, foreigners will be the first to go, all else being equal.
Because of their long historical immersion into the work-force, Malaysians have rarely been regarded as “foreigners” like mainland Chinese or Indians. Many have been Permanent Residents for decades.
The uncertain global dimension of the crisis is making it hard for people to really tell how deep €“ or long lasting €“ the recession will last.
Trying to inject a more balanced sentiment into an excessively worried populace, Government of Singapore Investment Corporation deputy chairman Dr Tony Tan said:
“In these difficult times, I think one has to have a sense of perspective. This is not the end of the world. This is not the end of the US as an investment market, we believe, not only would the US eventually recover from the financial crisis.”
“We will all survive,’’ added Dr Tan.
Some analysts, in fact, see a rainbow at the end of it with Singapore playing a bigger banking role to the world financial €“ if it manages things well.
Last month, Singapore overtook Hong Kong to rank third in the world in global finance, behind London and New York. Now despite the republic’s troubles, it gained 26 points in the index €“ or more than any other top-20 centres.
While London and New York have lost some of their financial influence, Singapore €“ with its large reserves and strict banking governance €“ could benefit from the chaos.
It could even emerge along with several others €“ including Hong Kong, Tokyo, Dubai and Shanghai €“ to form a new global financial bloc.
The British, American and European banking capitals will continue to play major a global role, but some of their luring attractiveness could drift eastwards.
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