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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Thailand to weigh new foreign business ownership rules

By Orathai Sriring (Reuters)

BANGKOK: Thailand’s military-appointed legislature will debate this week proposed changes to foreign business ownership rules that are still making foreign firms nervous despite government efforts to soothe their fears.

Business chiefs fear foreign companies will be driven away by the new rules, which emanate from the furor generated by the takeover of Shin Corp., the telecommunications giant founded by the former prime minister, Thaksin Shinawatra, by Temasek, the Singapore government investment firm.

At the least, the changes could stifle foreign investment in the export-dependent economy, business executives said.

“While other Asian countries, with less political and economic worries and larger markets, are opening up the doors for foreign investment, Thailand is doing the opposite,” said Paul Strunk, head of the German-Thai Chamber of Commerce.

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Singapore and Thailand Situation Deteriorates

The station was once owned by Thaksin Shinawatra

Thailand TV station taken over

The Thai government has announced that it will take over the country’s only main independent TV station, iTV, after it failed to pay unpaid fees.
The station was once owned by ousted PM Thaksin Shinawatra, who sold it to Singapore-based firm Temasek in 2006.

The broadcaster had until Tuesday to pay nearly 100bn baht ($2.9bn) in fines and unpaid fees, after losing a legal battle.

But iTV had already admitted it had no hope of finding the money required.

The station – which has no links with the British broadcasting network of the same name – will be shut down temporarily from Wednesday.

The takeover was widely expected after the government announced last week that it would terminate iTV’s licence if it failed to meet Tuesday’s payment deadline.

“The iTV station will be shut down from 7 March until there is clarity on legal issues,” said Dhipawadee Meksawan, a minister at the prime minister’s office.

Shin Corp, which was founded by Mr Thaksin and held a 53% stake in iTV, was bought last year by the Singapore-based firm Temasek.

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Spats with neighbours ‘not big problems’, says Singapore FM

Causing a military coup in Thailand is not a big problem, then what in the name of all that is holy would constitute a ‘big problem’ in George Yeo’s land of ‘lah-lah’?

The Nation

SINGAPORE – Singapore’s ongoing diplomatic spats with neighbours Thailand and Indonesia “are not big problems” and relations overall remain good, Foreign Minister George Yeo said.

“Our foreign relations are on the whole very good. We have excellent relations with all our major partners, with the US, China, Japan, India, Europe and Australia,” Yeo said in a speech to his parliamentary constituency late Friday.

“We have some problems with Thailand and Indonesia but they are not big problems. Generally speaking, our overall relations with Thailand and Indonesia remain good.”

Bilateral ties with Thailand were strained when the family of then prime minister Thaksin Shinawatra sold a 49 percent stake in Thai telecom giant Shin Corp to Singapore’s state-linked investment firm Temasek Holdings in a tax-free deal in 2006.

The deal angered the Thai public and led to months of street protests which sparked the military coup that overthrew Thaksin in September.

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Agence France-Presse

Thailand rally against Singapore increases tensions

I wish that a lot of these reports would refrain from refering to Singapore. The problem that led to the ousting of Thaksin was created by the People’s Action Party and Temasek not the people of Singapore. The people of Singapore have no prospect of exercising any rights of protest either in agreement with the People’s Alliance for Democracy or against them.

Last Updated 23/02/2007, 22:30:32
Radio Australia, Australia

Around 200 people have rallied against Singapore in northeastern Thailand in a protest outside Bangkok, as tensions continue between the two countries.

The protest was organised by the People’s Alliance for Democracy, the pressure group behind last year’s street demonstrations, which led to the ousting of premier Thaksin Shinawatra in a September coup.

The demonstrators marched to a military airfield in Udon Thani province, northeast of Bangkok, demanding that the air force review a Thaksin-era pact allowing Singapore’s military to use the site.

It’s the first anti-Singapore protest outside the capital Bangkok amid mounting tensions between the countries after Mr Thaksin, who has been living in exile since the coup, visited the city-state last month.

Bilateral ties had already been strained when Mr Thaksin’s family sold a 49-percent stake in Thai telecom giant Shin Corp – founded by the ex-premier – tax-free to Singapore’s state-linked investment firm Temasek in 2006.

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THAILAND: Singapore asks for explanation over satellite row

From ABC

Thai’s coup leader is involved in a row with Singapore over the sale of Thai satellites to a government-owned Singapore company. Singapore’s foreign ministry has asked for a diplomatic explanation from the Thais.
Presenter – Karon Snowdon, Speaker – Robert Broadfoot, managing director, Political and Economic Risk Consultancy

listen via windows media

SNOWDON: The Head of the Thai army, coup leader and political king maker, General Sonthi wants to get Thailand’s satellites back.

They’re the assets of the Shin Corporation satellite subsidiary.

They were sold off last year to the Singapore government’s investment company Temasek as part of a controversial multi-billion dollar sale by the Thaksin family.

General Sonthi says the satellites are national assets and should be returned to Thailand.

Managing Director of Hong Kong based Political and Economic Risk Consultancy, Robert Broadfoot.

BROADFOOT: So that’s why it’s even more important because the comments are by the military which has put the government in place.
Read the rest of the transcript

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‚Äôs 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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