Balancing act in reining in property prices

454 words
4 March 2014
Straits Times
STIMES
English
(c) 2014 Singapore Press Holdings Limited

 

THE Finance Minister made the right call in his Budget that property cooling measures should be retained, despite slowing sales. It is a never-ending balancing act to ensure that the usually volatile real estate component does not destabilise an open economy. Overall economic health has to override the competing interests of owners, investors, buyers and developers.

 

Younger married couples and older singles seeking their first homes have less cause to be worried as the Housing Board is catering to their needs. This is a social good the Government has promoted in state housing.

 

Predictably, prospective sellers and investors want the higher stamp duty and tighter mortgage lending rules relaxed to keep the spiral climbing. So do developers who have seen their profits reduced as sales contracted on weak sentiment and deferred launches. They plainly had sustainably high profitability in mind when they suggested the time was right to substitute some of the curbs, perhaps with a disguised capital gains tax.

 

Not so fast: The statistics support Mr Tharman Shanmugaratnam’s caution in wanting both the HDB and private sectors to be made more stable before curbs could be eased. Importantly, there is a need to “avoid a more serious correction in prices further down the road”, as the National Development Ministry noted.

 

Although buying interest has waned, this is not reflected in the depth of price correction. The private market has recorded a marginal drop, but prices are nearly two-thirds above the 2009 baseline when property values were more in sync with incomes. By one measure – The Economist’s price-to-rents ratio – Singapore property was the fifth most over-valued last year. In the region, it was exceeded only by Hong Kong and New Zealand.

 

Taking the relationship to incomes as another value indicator, a long 30-year term loan despite the low interest rates denotes a premium charge on career earnings capacity compared with other developed nations, where a typical term ranges from 15 to 20 years.

 

Holding real estate values at a stable level is a long-term objective of a well-adjusted economy. Just as buyers might yearn for lower prices, existing homeowners might prefer to see their property values continue to climb. To be sure, Singapore has room for prices to adjust downwards and the release of completed HDB and private flats which will saturate the market between now and 2016 may well do that. So also will interest rates which the central bank forecasts will rise as the United States goes off the steroids of abundant cheap money. Deciding when to tighten or loosen to maintain an even keel calls for fine judgment. Timing is, indeed, crucial.

Raising productivity: It’s personal

457 words
5 March 2014
Straits Times
STIMES
English
(c) 2014 Singapore Press Holdings Limited

THE Budget statement, as usual, had a range of incentives to help businesses raise their productivity rate as the economy is restructured. Over the years, the emphasis has been on training workers and nudging companies to adopt technology and new processes so that productivity and incomes may grow. These efforts should be sustained as the return on investment in productivity help schemes and tax incentives has not met expectations.

Another aspect of this challenge is the vital cultural change that has to be embraced by employers, workers and consumers if Singapore is to match or exceed the performance of the best elsewhere. This was a theme of Finance Minister Tharman Shanmugaratnam’s speech that deserves greater attention.

Mr Tharman said that to attain advanced-country incomes, Singapore would need to develop advanced-country capabilities, like sound management and commercialising research. The criteria ought to include the intangible matter of attitudes and how these can be developed into normative behaviours.

The minister mentioned three aspects: A workplace culture wherein workers’ opinions are welcomed and valued; job mastery, as in going beyond competence to strive for excellence; and consumers learning to be adaptive, such as embracing self-service practices.

Where does Singapore rank with the best? A starting point would be to agree that being good enough is just not good enough. It was plain that the minister felt Singapore could do better in the areas highlighted. This is the nub of the matter, which businesses and workers ought to ponder. Productivity could be boosted if interaction and people management improved, if workers are self-motivated and service trades are prepared for a wholesale image change. Start by dealing with common grouses about “disengaged” workers and old-style bosses who cling to “presenteeism”, equating presence in the office for long hours with being productive.

Japanese workers are known to be perfectionists, taking pride in even mundane work they do. This shows in their craftsmanship and attention to detail – from simple things like exquisite product packaging to the manufacture of cars, cameras and consumer electronics. In America, allowing creative mavericks space to explore wild ideas has spawned all-conquering products from Google and Apple. In Europe and Australia-New Zealand, multi-tasking waiters and tour coach drivers who double as guides and porters are the norm. They earn good wages.

It was timely for Mr Tharman to frame the productivity issue in a refreshing new light. The change he is seeking may be harder to execute than offering support programmes, as habits die hard. An important part of the process is seeing value in all forms of work – whether one is at the giving or receiving end. Labour should be anything but “cheap”.

Figuring out a new level for CPF rates

474 words
6 March 2014
Straits Times
STIMES
English
(c) 2014 Singapore Press Holdings Limited

A COMPELLING need to restructure the Singapore economy, to meet the challenges of globalisation, has given urgency to policy changes on the business front. Meanwhile, growing social needs have called for adjustments that further impact businesses. One such change is the Central Provident Fund (CPF) rate hikes of between 1 and 2.5 percentage points for workers. The bulk of these increases will go into medical and retirement needs, and help to address a major source of worry for Singaporeans. The National Trades Union Congress (NTUC) has welcomed the step, but it wants a further raising of older workers’ CPF contribution rates to put them on a par with younger workers.

As observed in Parliament, it is an irony to laud packages that honour elders and yet not speak against wage practices that discriminate against them. Another persuasive argument for CPF rates reform is the worrying indication that not enough is being saved for retirement by many workers. Indeed, one bank survey last year showed that four in 10 Singaporeans have not set aside a single dollar for retirement.

However, in deciding on a fair set of CPF contribution rates, it is best not to treat old formulas as benchmarks but to ask what would be sustainable in the long run. Rising business costs, transformation of businesses to grow revenue and raise productivity, and a tight labour market will challenge employers in varying degrees for years to come. Hence, the impact of changes must be considered against the backdrop of current and emerging economic realities, rather than with reference to, say, the combined contribution rate of 50 per cent in 1984 or the 30 per cent of 1999.

Here, it bears remembering that the lower rates for older workers were meant to give employers an incentive to retain them, instead of seeing them as a burden, to be reduced by switching to younger people. That objective must remain, but be combined with an outlook that gives due recognition to the capacity of many categories of employees, like knowledge workers, to perform at their peak in their 50s and 60s.

The best way to decide what is viable is through frank discussions among business, labour and the state. Tripartism obliges employers and employees to not see their relations as a zero-sum game. Singapore’s economic advances have depended on just this quality of trust – the bedrock of its tripartite system – which reminds them of the stake they have in each other’s prospects. The state acts as the arbiter and ensures that larger national goals are not lost in negotiations between the other two players. It is this spirit of shared responsibility for the future that must guide discussions on CPF rates. The NTUC’s call for more changes is a useful starting point.

Save water, come rain or shine

442 words
7 March 2014
Straits Times
STIMES
English
(c) 2014 Singapore Press Holdings Limited

WHILE a prolonged dry spell is leading to water rationing across the Causeway, water consumption here has gone up, deplorably. Certainly, foresight and planning has helped to shore up the nation’s water security, but it is not as though people can afford to lower their guard especially when sufficient relief has yet to come from the worst parched conditions here – February was the driest month in nearly 150 years.

Technology has proven to be a saviour in many respects but it comes at a high cost and will take many years before it plays an overwhelming role in catering to Singaporeans’ water needs. Newater will be able to meet 50 per cent of future water demand with desalination contributing 30 per cent by 2060. (Currently, 45 per cent is from local catchment areas and Malaysia, with 30 per cent coming from Newater and 25 per cent from sea water.) The demand for water here is expected to double over time, with non-domestic consumption growing from the present 55 per cent of total demand to 70 per cent in 2060.

It would be bad enough if the security afforded by new technologies contributes to the continuing profligate use of water resources. But what would be particularly harmful is a detachment from the realities of environmental threats, egged on perhaps by climate sceptics who view anthropogenic global warming as a fallacy. As the United Nations Intergovernmental Panel on Climate Change reported recently, the world can expect to see more “abnormal” and extreme weather patterns in the long term. The impact of these will be felt in diverse areas, with the UN already warning of reduced crop harvests, as a result of the current drought, further affecting food prices in the region – some produce from Malaysia already costs 25 per cent more here.

Hence, deeply ingrained conservation habits are needed to see significant reductions in water wastage in the domestic sector and also more cost-efficient water solutions being implemented by industries. Keeping showers to under five minutes, ensuring a full load when using washing machines, cutting down on car washing, and reusing water for non-potable purposes are tips that have been repeated often enough over the years.

Given the nation’s water history – drastic water shortages of the past and the political hazards of negotiating water treaties with neighbours – conservation should be something of an obsession here. Apart from constantly seeking inventive ways to produce water cheaply and finding fresh water sources, there should be an abundant flow of ideas on how to conserve and recycle water in every aspect of life here.

It pays to be cautious about digital cash

454 words
8 March 2014
Straits Times
STIMES
English
(c) 2014 Singapore Press Holdings Limited

THE collapse of the Tokyo-based MtGox, the bitcoin exchange that was once a dominant player, says a lot about both so-called renegade entrepreneurs and cyber buyers. It smacks of world-changing concepts that fail to deliver and overweening business plans unsupported by experience and prudence.

Some US$450 million (S$568 million) is said to have been lost from the MtGox debacle. Yet, bitcoin ATMs have appeared here for the exchange of Singapore dollars for the virtual currency. The lure of digital cash is partly driven by the speculative streak and partly out of need as e-commerce grows. Now, users have to rely on fiat currencies that have to go through credit card companies or payment providers like PayPal. This incurs currency conversion costs and other charges. It would be considerably more convenient and efficient if digital cash could change hands directly between online buyers and cyber merchants.

The vision of inflation-less currency that can move easily and without cost between sender and receiver is an attractive one. But one should not get carried away by it.

Some tough questions need to be asked. Are operators of any currency or payment scheme trustworthy and accountable to users? If there are doubts about a system’s security and support offered when something goes amiss, it would be reckless to convert large sums of money into digital cash.

Bitcoin is not underwritten by a central bank or a sovereign state. Indeed, it has no monetary value except that ascribed to it by an anonymous group of currency owners.

However, any sense of self-empowerment could be illusory. While bitcoin, Linden dollar and ripple might offer an alternative economic space, free of traditional encumbrances and costs, they also pose risks to users. As the Monetary Authority of Singapore warned last year and again recently, bitcoin is an unregulated virtual currency that may leave consumers without legal recourse should there be problems.

Not being legal tender, they are not recognised as an official medium of exchange or as a form of securities here. Also, crypto-currencies could face great fluctuations in value, a volatility that could hurt unwary consumers. Then, there is the danger of hacking, which is what brought MtGox down. The bitcoin bank Flexcoin, too, closed its doors after a hacker attack. Problems of traceability compound the difficulty of dealing with the aftermath of such attacks.

An associated danger is that these currencies could be used for money-laundering and terrorism. This makes them a threat to state and market security. Caution, therefore, is in order to ensure that investments in digital cash are not rendered worthless, either by fraud or ineptitude.

Reimagining service

321 words
9 March 2014
Straits Times
STIMES
English
(c) 2014 Singapore Press Holdings Limited

Restaurants and cafes in the West tend to operate with fewer staff than those in Singapore. At their best, workers take on more responsibilities, multi-task, know their products well, and have pride in what they do. This model can be replicated here if the three parties involved – customers, operators and workers – change their mindsets.

The customer is king but should one expect to be waited on hand and foot when labour is scarce? The restaurateur is focused on labour to achieve quick turnaround and higher revenue, but there are more efficient ways to do this. To the service staff, serving and clearing is grunt work but they can draw in more customers by helping to enhance the dining experience. These factors apply to the retail industry as well. What’s needed is a cultural change.

For starters, customers ought to treat service staff with respect and adapt to doing some things on their own to reduce waiting times. Think of it as an interactive experience, if you will. Certainly, youngsters would not mind chipping in. Operators ought to create an environment where customers are rewarded for self-service by making operations silky smooth (for example, easy-to-find items and information, simple bill payment and scope for choices). And workers can demonstrate mastery and social skills by guiding diners and shoppers with grace and knowledge. A job done with pride that leads to higher returns would certainly deserve better rewards.

There is also a place for technology in the service industry. Orders can be taken or placed by customers on palm-size tablets and orders can be organised electronically for efficient delivery. The tendency in the service sector is to see customer interaction as a high-touch effort. That is true but intuitive touch screens can fulfil similar functions, with the human touch applied for adding value to the experience – perhaps in a uniquely Singapore way.

Cyber menaces a law unto themselves

10 March 2014
Straits Times
STIMES
English
(c) 2014 Singapore Press Holdings Limited

THE ugly and, at times, tragic effects of online harassment and stalking in various cities have shown up gaps in the law that only some developed nations have begun to plug. Singapore is “behind the curve” in this respect, noted Law Minister K. Shanmugam, but is actively studying a legislative update. Assorted enactments can be turned to now when egregious conduct here warrants prosecution – like those relating to criminal intimidation, assault, outrage of modesty, hacking or incitement of hatred. But there is nothing specific to keep a lid on harmful behaviour arising from a digital Pandora’s box.

Legal activism follows in the wake of particularly jarring incidents. The case of the Rutgers University student who took his life, after secretly-filmed footage of a homosexual encounter was put online, drew international attention. Public outrage here was stoked by acts of online vigilantism involving disclosure of victims’ personal details and spiralling threats directed even at family members. The impact can be devastating and victims often find little recourse in the law.

However, clamping down on all forms of harassment holds implications. For example, many in places with a weak rule of law would cheer when corruption and gross negligence, flying under the radar, is subject to so-called “CSI-ing” – online investigation and shaming. Further down the spectrum, it is, quite simply, a potent way of mobilising public opinion against anti-social acts by a group or an individual – a sort of “grassroots democracy”. Those championing causes might rally others against unethical traders, profiteers, environment despoilers or animal abusers. It would be ironical if a harassment law is used by those targeted to seek civil remedies against critics.

Thus, a differentiated approach ought to be taken in applying a regimen of laws. Firm action is needed against netizens who go overboard, dispensing unbridled punishment far in excess of a perceived offence. At the other end, turning to the courts and police should not be the first course of action in response to every minor cyber dispute.

Educators, parents and the young themselves ought to play a part in curbing such behaviour by promoting responsible use of digital resources and protection of privacy. The distance and anonymity of the Net, poor control of impulsive reactions and weak empathy skills might play a part in spurring execrable acts of meanness. This has to be reined in by helping the young to see the serious consequences of misguided online acts. Legal norms can help to curb certain social ills emanating from online interactions while social norms help to maintain the vitality and openness of the interactive spaces shared by all for better or for worse.