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Singapore's wealth bubble may pop by seah chiang nee

winnipegjets

Alfrescian (Inf)
Asset
Insight Down South

Published: Saturday February 8, 2014 MYT 12:00:00 AM
Updated: Saturday February 8, 2014 MYT 7:55:24 AM
Singapore's wealth bubble may pop

by seah chiang nee

The city-state has attracted foreign wealth, but economists warn of trouble if tycoons were to pull out in the future.

MONEY, plenty of it! So much is circulating around parts of Singapore – much of it from abroad – that some economists are worried.

After years of success luring in foreign wealth, the city is now experiencing what an analyst calls a “wealth bubble” that is continuing to grow.

Noted global economist Jesse Colombo warned that several bubbles were on the verge of popping, threatening the city with an Iceland-style economic meltdown. He predicted in Forbes that this could happen within years.

They exist in property, Singaporean household debts and the bloated population of migrant workers.

“Singapore (also) has a wealth bubble,” added Colombo, who had earlier forecast America’s housing bubble.

For years, the republic had worked to attract high net-worth foreigners to its shores, a strategy that is unlikely to end any time soon.

Prime Minister Lee Hsien Loong said last year: “If I can get another 10 billionaires to move to Singapore and set up their base here ... Singaporeans will be better off...”

He indicated this would be pursued even if it worsens the rich-poor inequality.

(In the last 10 years, the wages of the bottom 20% fell by 10% in real terms, while those for the top one-fifth grew by some 30%.)

“I think Singaporeans will be better off, because they (foreign investors) will bring in business, bring in opportunities, open new doors and create new jobs,” Lee said. “I think that is the attitude with which we must approach this problem.”

He’s following in his father’s footsteps.

In the early 1980s, Lee Kuan Yew started to attract wealthy foreigners here to make up for a shortage of land and natural resources.

Lee, now 90, used to invite wealthy entrepreneurs, including a number of Hong Kong billionaires, to witness the National Day parades as special guests – and gave them permanent residency.

With low taxes, minimal corruption, protective banking laws and the abolishing of estate tax in 2008, his successors have succeeded in attracting more of them here.

Today, Singapore has 27 billionaires, the fifth largest number in the world.

New arrivals included US investor Jim Rogers, a Facebook co-founder Eduardo Saverin, New Zealander Richard Chandler, Indian telecom tycoon Bhupendra Kumar Modi, several Australians and Hong Kong movie stars.

One in 30 Singaporean residents is today a millionaire – doubling from 2008 to 2012. It has the world’s highest number of millionaires per capita.

The government appears to be unfazed by warnings of potential trouble if foreign tycoons were to pull out one day.

China feels differently. It started to curb the entry of hot money on concerns that capital inflows pose a threat to China’s economy.

Not many Singaporeans agree with their prime minister that having more billionaires necessarily means more investment and jobs.

“Some do invest here, but most simply park their money here and run their businesses outside,” said a retired banker.

They drive up the cost of living for locals, especially in real estate and cars, he added.

Colombo said Singapore’s total wealth rose by 8.7% in the past year alone to reach an average of US$282,000 (RM938,000) per adult.

The danger is that when Singapore’s bubble pops, it would cause “wealth to decline significantly”.

Lee Kuan Yew School of Public Policy associate dean Donald Low expressed concern about efforts to attract the super-rich here - even if they increase inequality.

“Relying on inflow of foreign monies to finance real estate domestically is often a recipe for financial disaster,” he told The Independent Singapore.

On perspective, the influx of so much money has some impact on the upper class, businessmen and property owners.

Generating investment and jobs rests more with global investors than billionaires looking for a safe place to park their money.

The Prime Minister is right in predicting that if more were to arrive, it would widen the economic gap between rich and poor Singa*poreans.

Whatever benefits they have brought here are being unequally distributed, observers say.

“While the rich have fun, locals are struggling to keep up with the rising cost of living,” a foreign TV journalist wrote.

Earlier, under pressure from Europe, Singapore banks started to scrutinise foreign account holders as stricter tax evasion measures kicked in.

This is to decide whether to send high-risk clients packing, said one source. They include wanted people accused of corruption elsewhere, criminals and drug traffickers.

Foreign politicians have charged that, as banking secrecy is lifted in Switzerland, some tax evaders are shifting their attention here.

Emotionally struggling Singaporeans are no different from people elsewhere when they see splurging wealth around them as they struggle to hold their jobs.

PM Lee’s remarks, saying the presence of 10 foreign billionaires is more desirable than levelling economic inequality, has hurt his popularity.

An undergraduate asked incredulously: “I don’t believe he said it. Was he quoted correctly?”

Adding to his woes is the growing class divide in society.

The recent misbehaviour of some wealthy residents – both foreigners and locals – in flaunting their wealth or thumbing their noses at ordinary people is adding public blame on his policies.

Law Minister K. Shanmugam told the Financial Times that the rich-poor gap was very obvious.

Recalling how he was cut off while driving one evening, first by a Ferrari and then by a Porsche, the minister added: “The middle class in Singapore has found costs rising because of energy, food and so on.”

They find themselves squeezed since they don’t get the government subsidies that the poorest 20% gets, he added.
 

winnipegjets

Alfrescian (Inf)
Asset
Goes to show how bankrupt of ideas is the PAP government.

The PAP government keeps looking outward to create economic growth and development. We started with a MNC focus development strategy. That worked initially until cost here was no longer compatible with low-cost manufacturing. The MNCs started to pull out in droves. PAP government panicked. Then it decided to bring in cheap labour to keep some of the manufacturing here. When other business wanted to be cheap, the PAP government brought in foreign PMET to replace locals.

Since that strategy was succeeding, it decided that it should bring in rich foreigners to create property bubble and inflation. But these overpaid so called smart people didn't see that no real value is created, instead bubbles resulted.

When is this government going to focus inwards? In the tested path of economic development, local companies take on prominence eventually. In our case, local companies are kept small as GLCs are crowding them out. Yet these GLCs are flops as they can't penetrate the international markets. Sinkapore is a country with no successful global companies. Thus our reliance on MNCs and we are constantly held hostage by them.

This party must go and all the leaders imprisoned in one of the southern islands.
 

borom

Alfrescian (Inf)
Asset
“We should attract foreigners to the country -- if you penalise them with additional tax, they might say that (Singapore does not welcome them),” said Mr Kwek (leng beng )-City Developments Limited’s executive chairman

http://www.channelnewsasia.com/news/business/singapore/cdl-chief-urges-govt-to/986072.html

Agree with Seah.
Most of the 60% live in fear and they (and more so their children) will suffer for this.

Developers like the Kweks openly showed their greed even after making their billions. They are happy to let property prices run away while millions are suffering and breaking their backs(and selling their souls?) to slave for their mortgage payments.
 
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laksaboy

Alfrescian (Inf)
Asset
All bubbles will eventually pop. There is a bubble in Singapore, all you need to do is look at the frenzy of constructing new buildings islandwide.

What the powers-that-be can control, however, is to ensure that the bubble deflates slowly, like air being let out of a balloon, instead of letting it burst with a mighty pop. Do something to cushion the negative fallout.
 

gingerlyn

Alfrescian (Inf)
Asset
Pls dont play play with Jesse Colombo as he prediction is very accurate and I am now hoping for Singapore property to go burst.

Jesse Colombo predicted oil price slump 6 months ago and It happens!!!!

http://www.forbes.com/sites/jesseco...sons-why-oil-prices-may-be-headed-for-a-bust/

The above article was writen by Jesse Colombo back in June 2014.

9 Reasons Why Oil Prices May Be Headed For A Bust

what happens now? look at oil price drops to USD72 per barrel!!!

PAP panic attack
 

BuiKia

Alfrescian (InfP)
Generous Asset
Cheebai, all these people so kiang then where they fuck were they when the CB MIW implemented the policy?

KNN, just keep quiet and now then talk.
 

The_Hypocrite

Alfrescian (Inf)
Asset
The last erection was to meant to make a difference but pap still got the votes. Now kpkb is too late. Singkies get the gahmen they deserve.

Cheebai, all these people so kiang then where they fuck were they when the CB MIW implemented the policy?

KNN, just keep quiet and now then talk.
 

Leongsam

High Order Twit / Low SES subject
Admin
Asset
The PAP government has the skills and foresight to handle these sorts of situations so don't worry about it.
 

mojito

Alfrescian
Loyal
All bubbles will eventually pop. There is a bubble in Singapore, all you need to do is look at the frenzy of constructing new buildings islandwide.

What the powers-that-be can control, however, is to ensure that the bubble deflates slowly, like air being let out of a balloon, instead of letting it burst with a mighty pop. Do something to cushion the negative fallout.

You mean like the Lost Decade in Japan?
 

Cerebral

Alfrescian (InfP) [Comp]
Generous Asset
Pls dont play play with Jesse Colombo as he prediction is very accurate and I am now hoping for Singapore property to go burst.

Jesse Colombo predicted oil price slump 6 months ago and It happens!!!!

http://www.forbes.com/sites/jessecolombo/2014/06/09/9-reasons-why-oil-prices-may-be-headed-for-a-bust/

The above article was writen by Jesse Colombo back in June 2014.

9 Reasons Why Oil Prices May Be Headed For A Bust

what happens now? look at oil price drops to USD72 per barrel!!!

PAP panic attack

I think the current sharp decline has to do with politics rather than the reasons given, even though i thought that it is a valid argument and those forces mentioned are in play together with politics.

If global demand is declining and OPEC is refusing to drop volume shows that they are using oil money to force Russian's hand. Based on close to $80, sanctions and dropping oil prices has costs Russia US140Bn.
 
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