Singapore – Island sits in an ocean of economic turbulence

Recommended by an anonymous emailer who I would like to thank for drawing my attention to the article. It is from the Sydney Morning Herald on the April 30, 2007.

Eric Ellis looks for explanations for Singapore’s booming property market.

SINGAPORE’S property market is roaring. And why I know that is because the lease on our apartment will soon expire and our landlady wants 70 per cent more rent than she did in 2004.

No matter that the place leaks like a Canberra cabinet and that its 1970s-wired electricity trips at least once a week: these are details too far for our poco-curante proprietrix. But she has noticed that a private banker from Tokyo has signed, sight unseen, for a same-sized unimproved flat downstairs at 150 per cent more than the vacating lessee paid, and she reckons we are getting a bargain for $6000 a month.

It’s all very puzzling as there’s no textbook rationale to the sudden real estate boom here. The economy’s growing at an unremarkable-for-Asia 6 per cent, much the same as it has for years, save the difficult “Asian Contagion” period of the late 1990s. There’s no more government pump-priming than usual, none of the official withholding of land to get prices artificially moving that’s much loved in Singapore’s rival for city-state hothouse, Hong Kong. And though wealthy enough, with just 4.5 million people Singapore is still 2.4 billion consumers short of being “Chindia”, Asia’s neologism du jour.

From Sotheby’s to shares, Singapore has no shortage of places to park cash. But new luxury apartment blocks are sprouting among the frangipani, touting all manner of metropolitan arcadia – infinity pools, gyms, private clubs. They sport funky names such as Trillium and Botanika, fashioned on hoardings in designer fonts usually seen in Wallpaper magazine. My favourite promises that the elysian towers rising behind it will be “Home to 46 of the Most Luminous Families” – which will presumably take care of electricity bills, also on the rise.

The reasons why it’s suddenly salad days for Singapore developers seem to reside in neighbouring Indonesia, a country rated by the graft watchdog Transparency International at 130th of the 163 nations it tracks in its annual corruption survey. TI’s first place, ie, the world’s least corrupt place, is occupied by Finland, Iceland and New Zealand. Australia ranks joint ninth with The Netherlands.

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Indonesian maid survives three-storey fall from Singapore flat

I am amazed that this is still going on. Year after year people are still sending maids out on to window ledges to clean their windows.

Mar 17, 2007, 14:22 GMT

Singapore – An Indonesian maid was in stable condition on Saturday after a three-storey fall from her employer’s Singapore flat when she slipped while cleaning windows, police said.

Nia Wulandari, in her early 20s, fell from the window ledge on Friday.

Two maids plunged to their deaths in October and November last year. There have been more than 100 workplace maid deaths in the city-state over the last seven years.

Nia, who was found by a neighbour lying motionless, was taken to the National University Hospital. Her arms and legs were in casts.

The maid told The Straits Times that she frequently climbed onto the ledge to do the cleaning.

More must be done to educate both maids and employers that it is not worth risking someone’s life for the sake of clean windows, said Jolovan Wham, executive director of a charity that shelters abused maids.

Laws were beefed up last October against employers who put their maid’s lives in danger.

An employer who knowingly allows a maid to endanger herself, or forces a maid into a dangerous situation, can be jailed up to three months and fined.

The employer is also to be permanently barred from hiring foreign maids.

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Deutsche Presse-Agentur

Singapore’s Moral Obligation

The following letter published in The Jakarta Post makes the allegation that Singapore is harbouring 500 Indonesians who have been charged with corporate crimes and 30 Billion US dollars worth of cash. Can one of the Peoples Action Party lurkers confirm or deny this allegation? We would of course prefer precise numbers rather than mere rhetoric.

I read with interest the article titled Indonesia: Big nation led by small minds (The Jakarta Post, Feb. 17).

It seems to have escaped the writer that Singapore has struck hard bargains throughout its history and likes to set the agenda. It was to its dismay that it found Jakarta no longer dancing to its tune.

Remember that it was Singapore who tried to tie the security/defense pacts with that of the extradition treaty, and they tried to deal with these as a package. This was their idea and Indonesia was obliged to comply with this set-up.

The action taken by Indonesia is very courageous because of the fact that Singapore has been dragging its feet on the extradition treaty as well as other outstanding issues.

It is an apparent fact that Singapore harbors over 500 Indonesian citizens who are charged with corporate crimes in their own country. The total wealth taken out of Indonesia and deposited in Singapore banks totals US$30 billion. Here we see the real reason for Singapore’s lack of interest in making the extradition treaty work.

I’m sure Singapore can afford to buy sand from other places at a premium price with the $30 billion it is “safekeeping” for the Indonesian criminals that are living the high-life in Singapore.

Indonesia must not fall for the stick and carrot game that Singapore likes to play. Indonesia must also not shy away from its right to get these criminals back home to stand trial and to recuperate the lost wealth that left with them.

Singapore needs to be made aware of its moral obligations and should not be surprised when it is at the receiving end of someone else’s grievances.

ZAKI HAMMAAD
London

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A relationship built on sand

Below are extracts from an article by Bill Guerin who has managed to take a step back from Singapore’s and in particluar Temasek’s ongoing financial dealings with its neighbours. The Peoples Action Party has often stated that no opposition party would be capable of running the economy and financial investments as well as they have been doing for the last thirty plus years. The rise to economic dominance in South East Asia was a majestic climb but now that the Peoples Action Party has reached a plateux they seem to be incapable of investing in their neighbours without causing a political stink. So just how great a job have the PAP been doing over the last few years.

JAKARTA – Singapore’s aggressive regional investment strategy has already taken bilateral relations with Thailand to an all-time low, but a rising tide of economic nationalism and unresolved extradition issues with neighboring Indonesia potentially represents a more crucial test for the island state’s economic diplomacy. […]

The Peoples Action Party will of course point the finger of blame not at their own party but that of the allegedly independent Temasek in order to defuse allegations that they are somehow mismanaging investments. This seems to be the current line of response in the Thaksin Shin Corp deal, but with the land-reclamation programme and its need for sand imported from Indonesia, such a defence is redundant. I am in no way buying the party line that Temasek is a separate ‘business entity’, but in this particular case the Peoples Action Party have less of a ‘deniabililty’ position to fall back on. The land reclamation project is an initiative undertaken and promoted by the Singaporean government. The Indonesian government has banned such sand exports to Singapore as leverage in negotiations over a planned extradition treaty.

Controversy over Singapore’s land-reclamation projects, which entail huge imports of foreign sand and soil, represent the latest spat in a historically prickly bilateral relationship – one that is coming under increasing strain that threatens Singapore’s Indonesia-based investments. […]

The two sides have been negotiating the issue [extradition treaty]on and off for more than three decades, although the issue became particularly heated after the 1997-98 Asian financial crisis, when a number of ethnic-Chinese Indonesian businessmen absconded with huge amounts of cash they allegedly illegally deposited in Singaporean bank accounts.

Singapore’s drive to be the Switzerland of South East Asia is built on the very premise that the accounts are easy to set up and the money placed in them is done so on a ‘no-questions-asked’ basis. Of course it attracts money gained through corruption or other questionable means. That’s the whole point of running a ‘Switzerland’ style banking system. The problem for Singapore and the People’s Action Party is that in doing it with money in South East Asia which has such a wide and visible lack of social equality it is ‘theft’. According to Andy Xie “Actually, Singapore’s success came mainly from being the money laundering center for corrupt Indonesian businessmen and government officials.” So until the extradition treaty is drawn up and it includes provisions to include economic crime the situation and antagonism between the two nations will remain.

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Indonesia bans sand to Singapore

George Yeo is apparently surprised that this action might be ‘politically’ motivated. Imagine politics interfering in a business deal – my God. Next the foreign media will be telling George that Temasek is actually being run by the Singapore government and that it has upset the Thai authorities and led to a military coup.

George also argues that these rather drawn out negotiations have not been easy. It can be rather difficult to string a conversation out while behind his back your accomplice is robbing their home.

As the article by Michael Backman asserts

The authorities have found out and you’re facing arrest. You need somewhere to go where authorities can’t touch you. So where do you go? The answer is Singapore. Why? Because it is a half-hour flight from Jakarta, or 45 minutes by ferry from the Indonesian island of Batam, and, most importantly, it does not have an extradition treaty with Indonesia.

It is largely ethnically Chinese, just like many of Indonesia’s white-collar criminals, if only because Indonesians of Chinese ancestry dominate that country’s business sector.

Singapore finally agreed to negotiate an extradition treaty last year after years of Indonesia begging for one. The process has been ridiculously drawn out. At least six rounds of talks have been held. Indonesia is angry and feels that Singapore is being obstructionist. But why should Singapore be slow? Probably because it is a haven for Indonesian crooks on the run, and they bring their money with them. Billions of dollars in corruptly obtained funds have flowed into Singapore’s property market and its banks.

So we all know how ‘difficult’ such negotiations can be. But for anyone to claim that any descision amongst these politicians, is some how a ‘political matter’ other than a mere business arrangement, well that is just down right unreasonable.

From the BBC

Singapore is to fix the price of sand used in the construction industry after Indonesia banned all exports to its city-state neighbour.

Officially Indonesia has said the ban is due to environmental concerns, but some believe it is politically driven.

A Singapore newspaper reported that it had been told that the ban was due to a difference over an extradition treaty.

Singapore is one of the largest importers of Indonesian sand, which is used to make concrete.

‘Counter-productive’

Singapore Foreign Minister George Yeo has said that, if true, Indonesia’s suggestion that the ban was in protest over delays to an extradition treaty, was “unfortunate and counter-productive”.

The two countries are separated by the Strait of Singapore

The comments were reported to have been made by an Indonesian official.

Mr Yeo added that negotiating the first extradition treaty between the two nations was not easy.

Indonesia has been pushing Singapore for an extradition treaty which Jakarta says is vital in its fight against corruption.

The Indonesian government alleges that many suspects wanted in Indonesia on corruption charges have simple fled to Singapore.

Jakarta has previously banned the export of sea sand to Singapore, which is used in land reclamation.

Singapore is now fixing the price of sand to curb any inflationary pressures as importers have to switch to alternative sources.

Competition or collusion?

Indonesia accusing Temasek of ‘collusion’. Now I have seen everything.

Anti-competitive complaint against Temasek-linked telco investments in Indonesia may spark probe

Thursday • December 14, 2006

Tor Ching Li
chingli@mediacorp.com.sg

TEMASEK Holdings’ growing pains strike again — this time not in the streets of Thailand over Shin Corp, but in Indonesia over its control of the two largest telecommunications companies there.

An official at the Indonesian Business Competition Supervisory Commission (KPPU) confirmed with Today that a complaint had been filed against Temasek and its linked companies, ST Telemedia and Singapore Telecommunications (SingTel) — they own stakes in PT Indosat and Telekomunikasi Selular (Telkomsel), respectively — on grounds of price-fixing and blocking a new entrant, Bakrie Telecom.

“We are still clarifying the complaint and finding evidence, so there is no case yet,” said the KPPU official. Should evidence of anti-competitive behaviour be found, further investigations spanning up to 150 days will commence before a decision by the KPPU is made.

In a related move, the Indonesian government yesterday granted Bakrie Telecom, which currently operates only in some cities on Java island, a licence to operate nationally, according to Reuters. Bakrie Telecom is controlled by the family of Indonesia’s chief social welfare minister Aburizal Bakrie, and has slightly over a million subscribers.

Until now, the new market player has been trying to expand in a telecommunications industry that has Telkomsel and Indosat enjoying 80 to 90 per cent of the cellular pie. Since 2002, ST Telemedia has gained a 42-per-cent stake in Indosat while SingTel holds 35 per cent of Telkomsel’s shares.

Asked to comment on the allegations, ST Telemedia’s spokesperson Melinda Tan said: “ST Telemedia is a firm advocate of open competition. Our operations in Indonesia, Singapore and elsewhere are a testimony of this business philosophy.”

She added that there is no Temasek management on the ST Telemedia board. Indosat’s board of commissioners and board of directors, who are responsible for matters such as setting tariffs, are elected by the shareholders. “As a listed company in Jakarta and New York, Indosat is required to comply with (those) Exchanges’ strict corporate governance and transparency guidelines, which will not allow such collusion as reported in the media,” said Ms Tan.

SingTel declined to comment on its overseas operations. But analysts think this latest episode could be just another bump in Temasek’s turbulent foray into the Indonesian telecommunications market.

When ST Telemedia’s deal with Indosat was concluded in 2002, staff of the company took to the streets in Jakarta, fearing a dominant Singaporean presence in Indonesia’s mobile phone market. A group of political dissenters who opposed President Megawati Sukarnoputri’s administration also sought to annul the sale.

Last July, Indonesian Vice-President Jusuf Kalla — who has pro-nationalist views on business ownership — was quoted as saying that the government was eyeing ST Telemedia’s stake to boost its ownership of strategic state enterprises. The Indonesian government now owns 15 per cent of Indosat and 65 per cent of Telkomsel.

CIMB-GK Research regional economist Song Seng Woon thinks that the issue is likely to blow over, but urged Temasek to be more cautious with its foreign investments and “pay more attention to the political risk factor”.

Hong Kong’s migrant workforce exposes wealth gap

HONG KONG, China (Reuters) — Take a stroll through Hong Kong’s downtown Victoria Park on any given Sunday and one can witness a unique social ritual as the city’s one million domestic helpers revel in their weekly day off.

Sitting around in garrulous groups; Indonesian and Filipino maids can be seen chatting loudly, picnicking on home-cooked dishes, singing and dancing — often to the accompaniment of musical instruments.

It’s a boisterous, jubilant scene, beyond the dreams of maids around Asia including those in Singapore, who get just one rest day off a month — if they’re lucky.

But life for Hong Kong’s migrant workforce is anything but easy. Working hours can be extremely long, and many lack any privacy in the city’s cramped flats. Sometimes space is so scarce, maids have to sleep on makeshift beds on kitchen floors.

There also exists in places like Bethune House — a shelter for migrant helpers — a seamier world of maids suffering financial exploitation, underpayment, physical abuse and worse.

Tanuj Rai, a gentle, soft-spoken 24-year-old Nepali woman who’s been living in Bethune House for the past nine months was abused and blackmailed by her employer.

“I was raped many times. I had no friends,” she said.

Tanuj and others in the shelter, have been seeking redress for crimes committed against them, but the slow legal proceedings have left them jobless, poor and in a kind of legal limbo.

“The women are discouraged to lodge complaints because that would mean several months of no wages, so many just go back,” said Edwina Antonio-Santoyo, who runs the shelter.

“Only these women are courageous enough to file complaints against their employers,” she added.

By Asian standards, maids in Hong Kong are relatively well paid and are protected by labor laws.

But a notable number face widespread financial exploitation by employers and employment agencies, who flout minimum-wage laws with sophisticated under-the-table deals.

Social Workers say many maids work in situations of near “debt-bondage”, forced to pay crippling placement fees of up to eight times their monthly salaries. But the Hong Kong government has shirked responsibility for the problem, saying the maids first incurred these debts in their home countries.

“The problem with the Indonesian workers is that they’re very innocent, they never have knowledge of law in Hong Kong so they accept what the agency will offer,” said Eni Lestari of the Asian Migrant Workers Co-ordinating body.

Wealth and abuse
The migration of workers from poor countries to more affluent ones is illustrative of Asia’s gaping wealth gap, with affluent Singapore, like Hong Kong, able to employ maids en masse.

But Singapore, which has around 150,000 helpers, has gained a notoriety for headline-grabbing abuses against its migrant workforce, exacerbated in part, by government inaction.

Dewi Ratih for instance, a 24-year-old Indonesian from Central Java, was beaten repeatedly with a bamboo pole by her employer, who also burned her arms with a clothes iron.

“I was there for only a few weeks… If I had stayed there longer, I might have died,” said Dewi, displaying unhealed welts on her arms.

Groups like Human Rights Watch say abuses against maids like Dewi are widespread in Singapore, a situation at odds with the city state’s reputation as a wealthy, racially diverse and progressive society.

“They do have the power to enforce many laws and become a model for other countries, but they’ve remained one of the worst case scenarios,” said Nisha Varia, a researcher with Human Rights Watch and author of a detailed report on the issue.

While Singapore’s laws offer better protections than do neighboring countries like Malaysia, maids still face long working hours, pitiful wages and conditions amounting to “forced labor,” as well as sexual and verbal harassment, she said.

So far, Singapore’s government has been reluctant to grant maids full legal rights. Earlier this year, it made headlines by rejecting calls to give maids a statutory day off every month, arguing this would “inconvenience households.”

“I think it’s a surprise that the Singapore government isn’t taking the necessary steps to change the situation… The changes they’ve made have been so superficial and none have addressed the root causes of the problem,” said Varia.

Gradual empowerment
Back in Hong Kong, there is perhaps an important lesson to be learned — that progress, while difficult, is possible.

When the first Filipino maids arrived in the late 1970s, they had scant rights. It was only through sustained activism that they become more empowered, winning landmark protections like a minimum wage.

Nowadays, Church groups and increasingly sophisticated support networks are confident enough to fight the government in court and organize mass street protests.

“Nothing was given to us. We had to fight for everything,” said Antonio-Santoyo of Bethune house, “It’s the painstaking organizing work of the Filipinos who started forming organizations in the mid-’80s.”

Copyright 2006 Reuters. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.