And You Were Expecting……?

 

Singapore has suddenly become a very interesting place. Singapore’s reporters finally have something that their counterparts in other parts of the world take for granted – things to talk about. Our little island state, which took pride in being squeaky clean to the point of boring now has a host of scandals popping out every so often. So, one has to ask – what on earth is going on?

One of those big scandals evolves around a story on a couple of Chinese nationals getting busted to the tune of a billion dollars. Then men had allegedly used their dubious monies to go on a shopping spree of lots of high-priced real estate and other wonderfully luxurious items. Lots has been said about the case and so I shall leave the details of the case to intelligent people:

https://mothership.sg/2023/08/legal-fees-money-laundering-case/

 

 So, what can I, a mere mortal who doesn’t want to be associated with the intelligent on the island say that hasn’t been said before? Well, I guess the answer is – what else were we expecting? Our entire economic system, which was built on the movement of goods in-and-out of the place has now evolved into becoming about the movement of vast sums of money. If you listen to just about every government proposal around, you’ll notice a common theme – a need for the rich from elsewhere to park their money here. Hence, it’s a badge of pride whenever some billionaire or other moves here. Think of Eduardo Severin, the co-founder of Facebook. Who can honestly say they heard of him? Mark Zukerberg had long since become the face of Facebook, in the way that Lee Kuan Yew had become the face of Singapore until his death. His co-founders were in Silicon Valley speak rather like Singapore’s old guard ministers – sent to retirement to be forgotten.

However, for Eduardo Severin, this all changed when he moved to Singapore. Our media literally could not stop talking about him. The fact that he is in Singapore is newsworthy enough.

He’s only one of the best known to make it to Singapore. He is the living example of how well government policies work. The government argues that we need people like Mr. Severin to come here to spend their billions in order to create good jobs for the locals and any local who dares to have fantasies about making life for the world elite a little more interesting will be dealt with accordingly.

Let’s leave the billionaires aside and look at tourism. Why did we push through the building of two casinos and insist on having the “Only Night Race” here? Answer is simple, we want people with elsewhere with lots of money spending it here.

There’s no doubt that having people spend money there has economic benefits. Even Bhutan, which prides itself in being isolated, invites tourist in because tourist do provide foreign currency to a country to settle its bills. However, there comes a point when the chase for money becomes, well, a little in savoury.

Here’s where Singapore becomes interesting. If you look at the places that a “dubious” when it comes to money (think – most of the Caribbean or the Channel Islands), you can actually have sympathy for these places. Places like the Cayman Islands are literally too small to do much and, in a sense, they can argue that they don’t actually have choice?

Singapore is different. We have a world class port that is at the centre of a dynamic growth region. We have a history of making things, particularly in the electronics industry. Our population is educated. So, do we really need our entire system to be based on the world’s wealthy buying overpriced real estate?

Then there’s the fact that Singapore claims to be ruled by law and “compliance” is supposed to be stringent enough for the Western and Japanese multinationals to feel at home. So, how do we match things like strict adherence to compliance and the need to get as much money in as quickly as possible?

As with anything legal, there is ultimately the question of looking at the letter of the law. As a prominent enough expat banker explained – Singapore likes big sums entering quickly and getting out just before the international bodies start questioning. The banks just take their fees and money is in the economy fine and dandy. So, if you want to look at technicalities, I guess you could say that we play it safe.

However, while we may be clean on the technicalities, it doesn’t mean that we’ve stayed clear of the funny characters (Funny characters can afford lawyers to help them get round the system) and more importantly, has this love of collecting money from the world’s wealthy actually harmed our ability to generate wealth by other means?

After nearly a decade in corporate insolvency, I would argue that we have. If I look at a range of cases that I’ve handled, the landlord is inevitably one of the largest creditors or even the one that wound up the business. Rent is a killer and as one family butchery said “we’re effectively employees of the landlord.” Take our “cultural icon” hawkers, who make a living selling things like kway teow (fried noodles) at $5 a plate and pay rents of $5,000 a month. Ask yourself how many plates do they need to sell just to cover the rent?

That worry only applies to a guy who doesn’t have hot money backing him or her up. Someone who has hot money back merely needs to ensure the money flows through the books. Rents are, well, part of the professional fees. People with hot don’t need to innovate because, well, why should they when they know that the bills will be paid?

We need to relook at our system. Nothing wrong with getting money from elsewhere. However, we cannot be dependent on it. Its like drinking too much. The first bit of booze is fun but when you start to depend on it…..well, lets just say that visiting a hospital are filled with people who got too used to the high brought about by a dependence on booze.