Take shorter showers, eat less meat: Singapore’s mantra to fight slump

Bloomberg
17 Jan 2009

Until a few months ago, Amit Singh dreamed of buying a car. Now, with S$75,000 ($50,100) in the bank, the lawyer is holding back, saying he’ll continue to make the one-hour commute to work on the Singapore subway.

“In these bad times, the buzzword is save, not spend,” says Singh, 34. “It’s not the right economic climate to be lavish or to have a luxurious lifestyle.”

Singapore is asking its citizens, the world’s third- wealthiest adjusted for purchasing power, to be prudent as analysts predict the worst economic slump in the nation’s 43- year history. In speeches, pamphlets and ads, the government is advising people to switch to cheaper frozen meats, take shorter showers and skip the top-of-the-line mobile phone.

The island’s strategy contrasts with that of other countries such as Japan and Taiwan, which are trying to boost consumer spending to spur economic growth as exports falter. Singapore, whose 4.8 million population is one of Asia’s smallest, doesn’t have a big enough home market to make up for falling sales overseas, so officials “are not even going to try” to tell people to spend more, says Vishnu Varathan, an economist at Forecast Singapore Pte.

“There’s no way the domestic economy can make up for the slack in the external sector,” he says. The message “is to bear with pay cuts and live frugally.”

The government is preparing people for dwindling incomes as the nation’s fourth recession in a decade forces companies including lender DBS Group Holdings Ltd., manufacturer Stats Chippac Ltd. and state-owned investment company Temasek Holdings Pte. to fire workers or trim salaries.

Singapore last year unveiled more than S$5.4 billion in cash payouts, utility rebates and special funds, or S$1,700 for each of the nation’s 3.2 million citizens, to help the poor cope with rising food and energy prices.

Officials say people also need to help themselves during the economic crisis. If everyone depends on the government, “we’ll weaken ourselves as a society,” Prime Minister Lee Hsien Loong said on Jan. 11, according to the island’s main English newspaper, the Straits Times. “We’ll cultivate a sense of reliance.”

The World Bank predicts Singapore’s $161 billion economy will be East Asia’s worst performer this year. The government forecasts it may shrink as much as 2%, after expanding 1.5% in 2008 and 7.7% in 2007.

Kit Wei Zheng, an economist at Citigroup Inc. in Singapore, says the contraction might be as much as 2.8%—the most severe since Singapore gained independence in 1965.

The unemployment rate may more than double to 5% from 2.2% in September 2008, says Leong Wai Ho, a regional economist at Barclays Capital in Singapore. More than 30,000 jobs may be lost, he says, after about 400,000 new positions were created in the past two years.

That could boost the default rate on mortgages for government-built apartments, which house 84% of Singaporeans. The rate has risen to 8% from 5% in 2003.

Governments elsewhere in Asia are encouraging their more- sizeable populations to spend to counter the deepening global recession. Taiwan extended the New Year’s holiday an extra day and is scheduled to distribute NT$3,600 ($108) shopping vouchers to citizens on Jan. 18. Japanese Prime Minister Taro Aso has pledged to give households 2 trillion yen ($23 billion) in handouts.

That may not work for Singapore, where private consumption accounted for 38 percent of gross domestic product in 2006, compared with more than half in Australia, Hong Kong, South Korea and Japan, according to the World Bank.

Singapore’s leaders have traditionally preached restraint amid economic difficulties. In 2001, when the economy contracted 2.2%, the government refused to cap electricity prices and instead gave utility rebates to help the poor and encourage people to “save and not over-consume,” then-Prime Minister Goh Chok Tong said in an August 2001 speech.

The government’s latest campaign began last year when prices of food essentials including rice and cooking oil surged. As inflation soared to a 26-year high of 7.5%, Prime Minister Lee urged people to switch to frozen meats and in-house brands of supermarket products, which are typically cheaper.

Slowing global demand, excess capacity hit dry bulk shipping firms

By Desmond Wong, Channel NewsAsia
09 January 2009

SINGAPORE : Slowing global demand and overcapacity are sinking dry bulk shipping firms, with several seeking bankruptcy protection in the past three months.

Experts expect this trend to continue into 2009 as major economies like China slow consumption and financing becomes harder to secure in the industry.

The key Baltic Dry Bulk shipping index has dropped 92 per cent in the past year alone.

Falling demand for trade and difficulty in obtaining financing have led to an increase in the number of dry bulk ship operators and owners seeking bankruptcy protection.

Hiring rates have also plunged, with vessels which could have been hired out for US$200,000 a day in the past now going for between US$2,000 and US$9,000 a day.

And flagging demand is not the only stumbling block the industry is facing. An oversupply of ships in the dry bulk sector have kept rates down, and this could worsen next year.

Divay Goel, director, Drewry Maritime Services, said: "We would expect that even if demand were to pick up to historical levels which we saw in 2006 and 2007, we have a huge order book overhang in 2009 and 2010."

With the sector facing increasing financial difficulties, cancellations of ship orders and scrappings of half built vessels have increased.

While bad for shipbuilders, this could help the dry bulk sector in general to recover more quickly by trimming the number of excess vessels.

Christopher A Jones, director, Sale & Purchase, Island Shipbrokers, said: "With scrapping increasing and with cancellations in the new building order book, we expect that we will reach a more balanced fleet sooner than we expected."

Market watchers said the current correction is expected to bring dry bulk rates back to levels seen in 2004 before the boom seen in the past three years.

At that time, Cape-sized vessels were going for between US$60,000 and US$70,000 per day. - CNA/ms

Survey shows Singaporeans stepping back from personal luxuries

By Zhang Tingjun, Channel NewsAsia
09 January 2009

SINGAPORE: A survey by OCBC Bank has shown that Singaporeans are starting to step back from personal luxuries and ambitions.

Instead, they are now more concerned about the basics of home, relationship and family.

The survey of 400 Singaporeans aged between 18 and 64 was conducted in the fourth quarter of last year.

It found that travel has dropped from Singaporeans' top priority last year to sixth position now.

Four in 10 respondents said they would cut down on spending.

According to the survey, there are clear indications that luxuries and non-appreciating assets have now taken a back seat.

- CNA/ir

FairPrice extends discounts

Jan 14, 2009
By Jessica Lim (Straits Times)

NTUC FairPrice will keep its markdowns on hundreds of items till December, and double the number of budget buys on its shelves by March.

This is the longest extension on discounts since they were started in December 2007 to bring relief to shoppers from the soaring food prices then.

Yesterday, FairPrice also had relief for more than 6,000 staff members.

No one will be retrenched this year.

Instead, 500 more employees will be hired to fill the ranks at three new supermarkets to open this year in undisclosed locations.

It will also put 5,000 front-line employees through customer service training programmes at a cost of half a million dollars.

Not forgotten were some 100 small and medium-sized suppliers, who can expect payments twice as quickly this year from the supermarket giant.

Add to this increased funding to its trade union parent and more money from its charitable foundation to the community, and FairPrice is looking at commitments of $15 million this year, said chairman Ng Ser Miang.

In its stores, consumers will find reductions on 500 house brand items.

Soon they will have more of even cheaper goods to choose from, as the supermarket's buyers scour the world for 100 more items to expand its lowest- priced range.

These include Aro Soya Bean Oil at $2.95 a litre, and Care Goat's Milk Whitening Shower Cream at $2.95 for 1.2l.

This range of the supermarket's most affordable goods - named the yellow dot range for its distinguishing sticker on the shelf display price - will be extended to include other frequently used essentials.

They have been met by 'overwhelming response', said its director of integrated purchasing Tng Ah Yiam.

He noted that sales of Aro Soya Bean Oil have tripled since October last year when the range was launched, and that of Goat's Milk Whitening Shower Cream have doubled.

'This is an indication that during the downturn, people are looking for cheaper alternatives. We want to cater to this sector of the population,' he added.

The cooperative is also helping its smaller suppliers by cutting payment times from 60 to 30 days to ease cash flow and reduce dependence on loans.

Said Mr Ng: 'The crisis became bad in the last few months of last year, and discussions with suppliers started in September. We could see problems building up for them so we decided to come up with a way to help them.'

FairPrice will also increase its funding to NTUC, amounting to more than the $4.3 million last year, by at least half. Most of it will be used to help low-wage workers.

The FairPrice Foundation, the chain's new charity arm, will contribute at least 20 per cent more to the community this year. It gave $6.7 million last year.

In the meantime, consumers are looking forward to a wider range of budget items.

'This is great. It means I am not limited to just a few budget items when I want to save money,' said Mrs Stella Lim, 47, a mother of three.

Consumers have three tiers of lower-priced items to choose from.

First, 400 national brands - belonging to the Everyday Low Priced range - that are sold at the same price or lower than other retailers.

Second, 500 house brand products - including staples like bread, rice and cooking oil - tagged at 10 to 15 per cent lower than national brand equivalents.

Third, yellow dot items, which are about 25 per cent cheaper than national brands.

Ms Louisa Chua, 41, who now buys the cheapest brand of floor cleaner, is happy for the help.

She said: 'For some items, like floor cleaner, it does not matter if you buy the cheapest type. If I see a lower- priced version, I will buy it instead.'

FairPrice extends ahelping hand
January 14, 2009
Loh Chee Kong (TODAY)
cheekong@mediacorp.com.sg

A TOUGH year lies ahead but the island’s largest supermarket chain is bringing some cheer not just to budget-conscious shoppers but also for the first time, suppliers who are equally short on cash.

Yesterday, NTUC FairPrice announced a broad range of initiatives — which will cost $15 million — to “help Singapore ride through this recession”, in the words of FairPrice chairman Ng Ser Miang.

Said Mr Ng: “2009 will be a challenging year ... Amid this challenging landscape, NTUC FairPrice as a social enterprise is all the more committed to doing more.”

Apart from pledging $8 million to the community through the FairPrice Foundation, the measures include expanding its three-month-old programme to bring in and help customers identify the cheapest products in its supermarkets.

Such items, which are between 20 and 25 per cent cheaper than rival brands, will be tagged with bright yellow stickers. Their number will also be doubledto 200 by the end of March.

FairPrice is also extending its 5-per-cent discount scheme on 500 selected housebrands, initially due to end in March, until the end of the year.

As for its 100 or so suppliers, they can look forward to an assistance programme in which the supermarket chain will pay these small and medium enterprises (SMEs) earlier, reduce the listing and advertising fees it charges them and help to promote made-in-Singapore products.

Mr Ng said suppliers will also be paid much faster — with the waiting time for payment cut by about half. Currently, FairPrice has between 60 and 75 days — depending on agreed trading terms — to pay itssuppliers.

“We know that in various crises, the most critical part is really cashflow,” said Mr Ng, adding that the programme will cost FairPrice some $2 million in terms of the opportunity cost based on a monthly interest rate of between 1 and 2 per cent.

Suppliers and distributors — especially the smaller ones — are naturally pleased, given the economic slowdown made worse by a general shortage of credit in the global marketplace.

“With less business, cashflow would naturally be a problem,” said one distributor.

Noting that FairPrice has always paid up promptly,Mr Kenneth Goh, the purchasing manager of food importer Goh Joon Hin, said while the situation is not dire, “early payments are always welcomed”.

A representative from a fast-moving consumer goods distributor told Today that it received its payment early from FairPrice last month.

He added: “We thought it was a one-off ... the fact that they will be paying us early for the year ahead is good news. Ours is a business based on cash and everyone is experiencing a tighter cashflow.”

When contacted, other supermarket chains said they have no plans to follow FairPrice’s move to ease suppliers’ cashflow worries. But a Sheng Siong spokesperson reiterated that it is constantly on the look out for opportunities to lower the prices of its products to benefit customers.

Mr Ng added that in spite of the economic gloom, FairPrice, which has some 6,000 employees on its payroll, will continue its expansion plans this year by opening three new outlets and hiring another 500 staff.

Promising not to retrench any staff for the next two years, Mr Ng said the supermarket chain will also be doing some astute shopping of its own — in terms of looking out for new management staff.

“We will also take advantage of the downturn to look out for new talent for succession planning,” said Mr Ng.

CapitaLand lowers electricity and water consumption, saves some S$1.5m

By May Wong, Channel NewsAsia
14 January 2009

SINGAPORE : Real estate giant CapitaLand saved some S$1.5 million last year by reducing its electricity and water consumption.

The green efforts were carried out across 23 properties such as its retail malls and office buildings.

The amount of electricity saved can power about 13,000 five-room HDB flats for one month, while the amount of water saved can fill 24 Olympic-sized swimming pools.

Last year, CapitaLand achieved its target of lowering its utilities consumption by two per cent compared to 2007.

This year, the company wants to reduce the use of water and electricity in about 150 local and overseas properties by three per cent.

That will help save up to S$4 million in utility costs. - CNA/ms

Rich bear the brunt

Inflation hits top income earners in unusual turnabout
Neo Chai Chin (TODAY)
March 25, 2008

FOR the first time in at least eight years, the wealthy in Singapore have borne the brunt of inflation, while lower-income earners have — in a reversal of roles — seen expenses rise at a slower rate than the national average.

In the last six months of 2007, inflation was 3.9 per cent for the top 20 per cent of income earners. The bottom 20 per cent saw a 2.8-per-cent hike in their consumer price index (CPI), while middle-income earners fell in between, with 3.3 per cent.

For the whole of last year, the top income-earners experienced 2.3-per-cent inflation, compared to 2 per cent for the rest.

It's an unusual turnabout. The Department of Statistics records dating from 2000 show inflation hurting the bottom 20 per cent of the population most. And one key reason high earners were harder hit last year: Spiralling fuel prices, which started reaching record highs in October.

This, said economists, fed into more expensive holiday travel, cars and petrol. Together with housing — where private property rentals helped push up the CPI — transport and recreation costs make up almost two-thirds of the top 20-per-cent earners' CPI.

Forecast's economist Vishnu Varathan said the affluent are more likely to hail cabs and to drive, and July's taxi fare hikes and higher pump prices would have affected this demographic more. "The impact of bus and MRT fare increases would be less acute for the lower-income as there have been small increases over time," he said.

Transport inflation for the bottom earners was 2.9 per cent for the second half, compared to 5 per cent for top earners.

As for recreation, said Standard Chartered economist Alvin Liew, the wealthy are more likely to go on holidays, and a "key component of air travel is fuel costs".

And with the high-end property market fetching record prices last year, consumers would have to pay higher rents for more swanky accommodation, said Mr Varathan.

But does all this mean that higher earners necessarily had it harder than the middle- or lower-income? Not so. As Citigroup economist Chua Hak Bin pointed out: "What is important to note is that the higher-income group saw the highest nominal wage increases and are better able to withstand higher price increases."

Looking ahead, a slower global economy this year could ease prices of luxury items, which form a more significant part of higher earners' CPI, said Mr Liew.

Overall, however, it is uncertain if inflation will continue to be higher for the rich. Economists point to the twin trends of rising food prices and fuel costs, which affect all tiers of society.

Mr Varathan felt food prices — which went up by 4.1 per cent in the second half, up from just 1.7 per cent in the first half of 2007 — were likely to remain high because of global trends such as urbanisation, the growing of biofuels and increased consumption of meat. These impact the supply of food — cultivation of biofuels means less farmland available, for instance.

Can rising inflation be halted? February's CPI rose 6.5 per cent over the same period last year, with transport and communication, food, education and healthcare costs leading the surge. Part of it could be attributed to the Chinese New Year period, when food and overseas travel are at a premium.

Still, a reprieve could be in sight - the slowdown of the global economy and excess manufacturing capacity could lead to lower prices in the second half of the year, said economists. And come July, the effects of last year's GST hike will no longer reflect in year-on-year CPI comparisons.

OTHER SNAPSHOTS OF 2007

Healthcare

Middle-income earners were the hardest hit – healthcare costs rose 4.3 per cent for them, higher than the overall 4.1 per cent. Economists did not know exactly why this might be, saying more research had to be done. For example, are the subsidies for the poor benefiting the middle classes? Did hospital charges rise proportionately across all income classes? What types of medication did the middle classes consume?

Food prices

While the hike was about equal for all income groups, averaging 2.9 per cent, the poor felt the impact most as this component accounts for almost 30 per cent of their expenditure.

Housing

Thanks partly to the moderating influence of service and conservancy charge rebates, bottom and middle-income groups saw inflation of 0.1 per cent, compared to 1.2 per cent for top earners.

Inflation hits top income earners in unusual turnabout

Conservation alone 'is not enough'

VIEWPOINT
Richard Leakey
BBC News
10 September 2007

Ahead of Wednesday's publication of the 2007 Red List of Threatened Species, Dr Richard Leakey argues that conservation alone cannot save threatened species such as the mountain gorilla. In this week's Green Room, he calls for action on humans' needs as well.

These deaths were repulsive for the fact that the gorilla corpses served no use to the killers

Millions of people were horrified by the recent slaughter of mountain gorillas that dominated headlines for the inhumanity that seems to cling to this corner of the world.

In the space of a month, nine gorillas - more than 1% of the known population of these charismatic relatives of ours - were wiped out. All were from the Democratic Republic of Congo's (DRC) Virunga National Park.

Predictably, the slaughter drew an outraged response. Wildlife conservation organisations leapt into action and began raising funds to deal with it, and a crisis team went in on the ground.

In the following four weeks, peoples' compulsion to do something to save the species produced donations amounting to tens of thousands of dollars.

Living at the epicentre of the bloodiest conflict since the Second World War, the mountain gorillas share their habitat with heavily armed militia.

In other lawless regions, where wild meat comes into contact with hungry gunmen, species are slaughtered for food, or for trophies to be traded for cash and weapons.

But these deaths were repulsive for the fact that the gorilla corpses served no use to the killers.

On the contrary, it is the very presence of mountain gorillas in the Virunga National Park that threatens them, for the animals draw attention to an area that unscrupulous people would rather have us forget.

Fuelling conflicts

At the heart of the crisis is charcoal - the main form of household energy in Africa. And making charcoal means felling forests, destroying wildlife habitats, damaging ecosystem services such as water catchments and soil fertility.

Charcoal production has been going on for millennia, but recent events in eastern DRC have led to a sharp escalation in demand.

In neighbouring Rwanda, an enormous human population has stripped almost all its indigenous forests bare; while in the Congolese border town of Goma, refugees fleeing the region's crises have swelled the population to more than half a million.

Together, they've created an insatiable demand for charcoal worth an estimated $30m (£15m) a year.

To save Rwanda's few remaining forests and the gorillas that have become a major source of tourist revenue, President Paul Kagame has installed a surprisingly efficient and effective ban on charcoal production.

Ironically, however, that has driven the black industry across the border into DRC, threatening the habitats of the very same gorillas in the park which straddles both countries.

Given the lack of any form of effective government in eastern Congo, and the ludicrously small government salaries - a ranger earns about $5 (£2.50) per month - it is not surprising that the parks' forests have become a commons and virtually everybody is involved in the scramble for resources, from peasants to high ranking government officials and rebel militia.

If gorillas focus unwelcome global attention on the park, it is hardly surprising that those getting rich on charcoal will want to remove that attention by getting rid of one of our closest biological relatives.

As shocking as the gorilla executions were, this is fundamentally a human tragedy, with very human solutions.

There must be alternative sources of energy to meet the demand in both Rwanda and eastern Congo. There must be a return to the rule of law in DRC, where the forests are saved for the long term good of all, rather than looted for the short term riches of a few.

In it together

Although it seems to be a very local problem, we all have an interest in protecting the forests.

It will take a focused global initiative to end the conflict, introduce alternative sources of household fuel, and create alternative livelihoods

Not only do we risk losing one of the most charismatic and important species on Earth, but we are in danger of doing more damage to the world's warming climate.

In that respect, the forests' destruction is a double whammy. Burning charcoal is one of the greatest sources of atmospheric carbon dioxide, but it also strips away the trees that otherwise soak up so much of the carbon dioxide in the atmosphere.

While the alarm has been raised by conservation organisations concerned about gorillas, and the global public has responded, it is clear that the problem is much greater than one of conservation alone.

This is a human development crisis and it will take a focused global initiative to end the conflict, introduce alternative sources of household fuel, and create alternative livelihoods for the population living in eastern Kivu.

If the underlying demand for charcoal is ignored and we focus too much on the gorillas alone, we will not only see the extermination of the mountain gorillas, but the forests, woodlands and all the unique species that inhabit this biologically diverse landscape.

We will also lose the climate mitigation services that the intact forests provide. In the end, we could see a human crisis that will dwarf the tragedy of nine gorillas.

Dr Richard Leakey is the founding chairman of WildlifeDirect, a former head of the Kenyan Wildlife Service and a leading palaeontologist

The Green Room is a series of opinion pieces on environmental topics running weekly on the BBC News website

SPEND MORE, BUSH TELLS CHINA CONSUMERS

6 September 2007 (TODAY)

SYDNEY - United States President George W Bush yesterday urged China's
consumers to spend more to help close a yawning trade gap with the US, as
he prepared to meet his Chinese counterpart Hu Jintao today.

While trade will likely top the agenda at the talks, the leaders are also
expected to include prickly issues such as exchange rates and reported
Chinese cyber-attacks on the Pentagon, reflecting a relationship Bush
termed "complex".

"We certainly hope that China changes from a saving society to a consuming
society," Mr Bush said, ahead of the Asia-Pacific Economic Cooperation
(Apec) forum.

"Right now, because of the lack of a (social) safety net, many Chinese
save for what we call a rainy day," Mr Bush said. "What we want is the
government to provide more of a safety net so they start buying more US
and Australian products."

Most American criticism of the surplus is focused on the value of China's
currency - said to be kept artificially low - but Mr Bush focused on
China's high savings rates ahead of his meeting with Mr Hu.

China's enormous trade surplus with the US is a regular bone of contention
in bilateral relations, with widespread American claims that jobs are
being lost to the massive Chinese exporting machine.

The gap with China, which has the lion's share of imports into the US,
expanded to a record US$21.2 billion ($32.3 billion) in June from US$20.02
billion in May, according to US official data. - AFP