BEYOND SG

Globalization steals my job

Honey, a foreign talent stole my job... or did he?

One of the most controversial aspects of globalization is the loss of jobs due to immigration and global talent movement. Intuitively, it makes sense. If I am the only person or the few people in my country who can do a particular task, I will be highly valued. If my country encourages immigration or worse, brings in talents that match or exceed my skill sets, then I will be less valuable. At some point in the spectrum of my desirability as an employee, I will be out of a job.

The pro-globalization gang thinks otherwise. Having more highly skilled workers means making a country more desirable for global investment. Yes, it is true a single skilled engineer is priceless in that economy. However, by inviting global talents, we can have several skilled engineers who can work in several companies. If these companies flourish, they will need more engineers and everybody will be highly prized. That in turn invites more global talents and more MNCs and local enterprises. This positive loop generates wealth, happiness and progress for our nation. So the theory goes.

So who is right? The selfish "me-ism" or the latter globalization theory?

The Undercover Economist

Tim Harford has a simplified answer in his bestselling "The Undercover Economist". It is pretty elementary from his "undercover" point of view. (The following is not his exact explanation but it is my perspective following his impeccable logic. Should you wish to find out his exact view, please buy his excellent book, it's a great stimulating read. Also note this is not an Amazon-linked promotion site.) There are really two classes of workers - skilled and unskilled. If you belong to the skilled worker category, you will welcome globalization because you enjoy the same mobility as your competitors (the oft-quoted hardworking Chinese and Indian talents). If your country has a relaxed immigration policy i.e. both skilled and unskilled workers can easily compete in your economy, you, as a skilled worker can do MORE because you can delegate work downstream to less skilled workers, have MORE opportunities because the variety of skill sets available is MORE and ultimately, earn MORE.

Here is the bad news. If you belong to the unskilled category, then a relaxed immigration policy (skilled and unskilled workers) will really make you less valuable. Interestingly, if your country only has a global talent invitation programme, your unskilled job may still be safe. A skilled engineer is unlikely to compete with you to carry bricks. To back up his undercover economist view, he cited examples that US unskilled workers' salaries have remained relatively unchanged because US has a fairly relaxed immigration policy.

In short, if you are a category X unskilled worker, you are seriously threatened if category X is specifically encouraged to come into your country. If A, B, C, X, Y and Z come in at the same time, you will be badly affected too. If you are a category A skilled worker and if your country specifically brings in category A worker, you will still be fine because you can move elsewhere. If A, B, C, X, Y and Z comes in at the same time, you will be fine due to more opportunities and global investments.

Is your job safe in Singapore?

So where does Singapore stand? There is no doubt we welcome foreign talents. If you are a skilled talent yourself, you are fine. If you belong to the unskilled category, chances are you are fine too because (i think) Singapore does not actively encourage unskilled migration here. So who are really threatened? I think it will be those caught in the middle. Look around you. Ask yourself at honest question- what are the real skill sets of those executives and managers? Sure, they do great Powerpoint, say the right oxymoronic things at the meetings ("let's double confirm if we are on the same page on this cost cutting issue" - Dilbertish classics) and play golf and drink wine with the bosses and customers. I dare to be impolite here and risk angering many who read Beyond SG because I think I am one of them. Strip away our connectivity, our posturing, our Powderpoint skills, our Business Development Skills (what is that anyway?), our Blackberry email forwarding skills, we are empty vessels in the commercial fast lanes.

When we hit our forties, laden with condominium and BMW debts, the bosses or CFOs will figure out we are really too expensive anyway and invent creative ways to eliminate us. And because we are in between the unskilled and the truly skilled, the foreign talents would not mind "dumbing down" to do our jobs. Conversely, the hardworking, street smart (but less skilled) talents would work doubly hard to "move up" the ladder to do our jobs. (For amusing articles of this phenomenon, please read Stanley Bing! - the last page of Fortune Magazine.)

I think that is the major challenge facing Singapore. How to move this sandwiched class' skill sets up the value chain (sorry, I just had to use the cliche term) and how to lower their expectations of a lifestyle they don't deserve in the ruthless, flat new world. The former can be achieved thru education and desperation. The latter can be achieved thru...hmmm, education and desperation too.

Serial or Paranoid

I don't have to look far for such desperate people. After listing my small tech company, I am picking up new skill sets for my second company. I am also learning basic Arabic and brushing up my PSLE level Chinese (you know what I mean). In Singapore weathervane culture, I will proclaim myself as a serial entrepreneur because it is the 'in' thing now. Utter that and all the yes men and women will nod with approval. Recently, every other entrepreneur I met labels himself as some tireless, serial entrepreneur and it scares the living daylights out of me. (I dislike the term because "serial" brings up murderers and rapists in my mind, thanks to all the CSI and a certain Hannibal Lector). As a sandwiched class in a globalized world, I will settle for a more apt and humble title, "willing to learn and forever paranoid". (Special thanks to Andy Grove).

Harold Fock

 

The Wagah Crossing

1. The daily flag lowering ceremony at the Wagah border between Indian Punjab and Pakistani Punjab is fascinating to watch. In 1947, when British India was partitioned, the line was drawn between Lahore and Amritsar. Many were killed in cold blood in those horrible days when Muslim and Hindu/Sikh Punjabis fled in opposite directions. Trains arrived at the station filled with dead bodies. Although there is still tension between India and Pakistan, it is much better now. The border is open and one Pakistani diplomat in Singapore told me that the shortest and cheapest way to his home in Lahore was via SIA's direct flight to Amritsar from where he drives across the border. For ordinary travellers, crossing that border can take a few hours.

2. We arrived at Wagah on the Indian side in the late afternoon. The atmosphere was that of a carnival with loudspeakers on both sides blaring out what sounded to me like martial music. Each side had tiered seats for spectators. Then, in synchronized parade, soldiers on both sides took up position with high kicks in triple speed. Even the uniforms were matched with beautiful fans on the headdress, in green for Pakistan and in red for India. At the appointed time, the gates were flung open, newspapers were exchanged and soldiers from opposite ends advancing menacingly towards each other, stopping just short of the dividing line. A handshake lasting less than a second was quickly exchanged without smiles. Buglers sounded the last post as the two flags were lowered and retrieved. Then the gates were slammed shut. To each action, the crowd cheered its side on as if this was the world cup. On the Pakistani side, an old man with a white beard dressed in green waved the Pakistani flag. I was told he did this everyday for the last twenty years.

3. That both countries consent to this daily ceremony and to their soldiers being jointly rehearsed for it shows that the relationship between India and Pakistan cannot be all that bad. Indeed there is reason to be hopeful. In recent years, more crossings have been opened. A compromise on Kashmir may be possible but it will take time. A Singaporean watching the daily ritual will be struck more by the similarities than the differences between the two sides .

George Yeo

A Warm Welcome

1.    I had a series of back-to-back meetings today.  After a meeting with Rahul Gandhi, I was hosted to lunch by the Commerce Minister Kamal Nath.  I then called on  Finance Minister Chidambaram,  Petroleum and Natural Gas Minister Murli Deora, Human Resource Development Minister Arjun Singh and Prime Minister Manmohan Singh.  My meeting with Foreign Minister Pranab Mukherjee was followed by an official dinner at Hyderabad House.

2.    Singapore's relations with India have never been better.  They have expanded from the political and economic domains to defence, culture and education.  Our reputation for competence and reliability stands us well. This a mutually-beneficial long-term partnership.  India's 'Look East' policy was a major strategic move.  As Singapore's presence in India grows, so, too, India's presence in Singapore.  There are now over 2000 Indian companies in Singapore.

3.    The Indian economy is  entering a new phase of comprehensive growth. Everywhere there are bottlenecks.  The fear is inflation which has reached 6%.  If the supply side can be eased, India can achieve double-digit growth.  But, as in many countries, the growth is uneven.  The rural sector
lags.  Because of land reform carried out when the Communist Party took over the government in 1977, West Bengal's farmers are relatively better off.  In free elections, the Communist Party has increased its share of seats from two thirds to three quarters.   The states of Bihar and Uttar Pradesh are being left behind because of caste conflict.  Compared to China, India is much more diverse.  But it is also making good progress. Thousands of kilometers of highways are being built.  Hundreds of billions of dollars will be pumped into physical infrstructure in the coming years.

4.    Manufacturing in India is growing at double-digits.  This has surprised many analysts who once thought that India would only be good in services.  Even in textiles, India is holding its own.  Order books are full.

5.    With opportunities simultaneously opening up for us in India, China, Vietnam, the Middle East and elsewhere, this is an exciting time for us. At the steel town of Jamshedpur, I saw big letters written on a wall saying 'will to work, will to win'.  That should also be our motto.

George Yeo

 

Does the 21st Century belong to Asia?

SPEECH BY GEORGE YEO, SINGAPORE MINISTER FOR
FOREIGN AFFAIRS, AT THE CII PARTNERSHIP SUMMIT
IN BANGALORE ON 18 JAN 07 AT 2.30 PM

Does the 21st Century belong to Asia

1. I get worried every time a question is posed in this way.  It is hubris.  It was less than 10 years ago when a spate of articles appeared in the US asking whether Washington as sole hyperpower should be thinking of exercising influence in the world the way Rome did two thousand years ago.  That thinking underlay the neo-conservative view of the world and led to grief.  We must never over-rate ourselves.

2. There is no doubt that Asia is resurging.  With over half the world's population, this resurgence will transform the world in this century.  For most of history, China was the world's biggest economy and India the second because of the large number of people.  It is likely that they will resume these positions in the coming decades.  With four times the population of the US, China only needs to achieve a per capita income one quarter that of the US for its economy to be equal in size.   Such a per capita income would still be less than that of Taiwan today. After 2030, India will have even more people than China.

3. But nothing is predetermined in human history and many things can go wrong for Asia.  In past periods, every major shift of power in the world was accompanied by wars and social upheavals.  The rise of Europe five hundred years ago began a long era of conquest and colonization which effects we are still feeling today.  The shift of power across the Atlantic to the US only became clear after two world wars and one great depression.  The first challenge to the West in Asia by Japan was in the end snuffed out by two atomic bombs after a long war which killed millions of people on the Asian mainland.  When we talk lightly about a shift of power to Asia, let us never forget the lessons of the past.

4. The big challenge for Asia is therefore one of war and peace.  Last year, the US Department of Defense in its Quadrennial Defense Review last year publicly identified China as the only country that could challenge the US in a comprehensive way.  The wise managment of Sino-US relations is therefore of the greatest importance to all of us.    If that relationship is mismanaged, all bets are off.  India is increasingly figuring in that equation whether it wants to or not.  As an American explained to me, the reason the US Congress passed the nuclear cooperation agreement with India recently was not out of love of India but out of fear of China. However, it is not in India's interest to see the US and China come to blows.  India, like Singapore and ASEAN, prefers a Pacific that is peaceful.  There is no danger that the US and China will become so close that our own interests are short-changed. 

5. Between India and China, bilateral relations have entered a new era of cooperation.  While it is only to be expected that each will eye the other warily, the general trend is towards greater engagement.  As PM Manmohan Singh said, each is too big to be contained by the other and the world is large enough to accommodate the aspirations of both countries.  Bilateral trade is growing rapidly with China becoming India’s biggest trading partner.

6. Building a regional architecture which enables problems to be managed and kept within bounds is therefore of the highest priority.  APEC, the Asia-Pacific Economic Cooperation forum, is the most important regional organisation holding the two sides of the Pacific together.  At the APEC Summit in Hanoi recently, the Leaders agreed to consider the idea of a Free Trade Area of the Asia-Pacific.  Keeping minds focussed on economic cooperation instead of political adventure is helpful in itself.

7. The East Asia Summit (EAS) is another important initiative.  ASEAN included India, Australia and New Zealand in the EAS to ensure that the region stays outward-oriented and inclusive.  It is an important forum for India and China to engage each other taking into account the interests of the smaller countries in the region.  All of us in the EAS share common interests in greater economic integration, better connectivity, energy security, environmental protection and the safety of our air and sea lanes.  One long term project being studied is the feasibility of a Free Trade Area embracing all the EAS countries.  This, together with the proposal for a Free Trade Area of the Asia-Pacific, will help ensure that the global trading system stays open under the WTO.  PM Manmohan Singh’s call for an Asian Economic Community is worth pursueing as a long-term objective.

8. In all these arrangements, ASEAN plays a major role, not because we are powerful, but because we are not.  Because ASEAN is completely non-threatening, we can deal with all the major powers in a fair and equitable way.  It is not in the interest of any of the great powers to see ASEAN balkanized.  If by the construction of a good regional architecture we are able to secure another generation of peace for ourselves, the future for Asia will indeed be bright.

9. Within Asia itself, we must ensure that regional disputes do not get out of hand.  Asia is too big and diverse ever to become a bloc.  In Northeast Asia, the relationship between China and Japan is improving.  By making his first official visit to China, Japanese PM Abe signalled his intentions clearly.  It is not in China's interest either to have bad relations with Japan.

10. In Southeast Asia, the ASEAN countries are coming closer together.  Just last week in the Philippines, the Leaders accepted the recommendations of an Eminent Persons Group as the basis for the drafting of an ASEAN Charter which will be the Constitution for an integrated ASEAN.

11. In South Asia, the key to peace is finding a creative solution to the problem of Kashmir.  The recent proposal by President Musharraf on Kashmir and PM Manmohan Singh's positive response to it give us reason to be cautiously optimistic.  Kashmir has long been a brake on the development of the Sub-Continent.  It is still a long road to an eventual settlement but just a more constructive attitude on both sides alone will create a better environment for trade and investment.  India has a chance now to achieve double-digit growth.  India's economic development should in the end pull the whole of South Asia along.  With India's growing links to ASEAN and Northeast Asia, all this will lead to a more organically integrated Asia. 

12. Rapid development in Asia has pushed up the prices of oil and gas resulting in  windfall gains to the hydrocarbon-rich countries of West and Central Asia.  The countries around the Gulf and the Caspian are all benefiting greatly from the energy boom.  Most of Asia is therefore on the move.  So long as the larger peace is maintained, although ups and downs there will be, we are likely to see much faster growth on average than the rest of the world.

13. Rapid growth is however creating its new problems.  With globalisation, income levels are stretching out in all countries.  In countries growing rapidly, the rich has become very rich while some among the poor remain desperately poor.  Unless special efforts are made to ameliorate the divisive effects, social tensions will increase in many countries.  Both the Governments in Delhi and Beijing are very worried about this.  Farmers committing suicide are only the tip of an iceberg which can knock our ship off-course.   If we look back at the industrial revolution in Europe, the social inequities created a fierce reaction expressed initially in purely destructive beheaviour and later as political and ideological movements - militant trade unionism, socialism, communism, racism, fascism and protectionism.  We must never believe that we are past the age of ideology or that this new age of globalisation will be a bed of roses.    There is no end to history.  Sooner or later, a new cycle will be upon us.  The emergence of Jihadi extremism which India and other countries have suffered terribly from is but one example of a reaction that will grow stronger in the coming years.  It is therefore imperative for governments in Asia to diffuse the social tensions brought about by rapid growth. 

14. Education is key.  While the middle classes are always able to fend for themselves when forced to, for those at the bottom of the social ladder, education is the only way for them to climb out of the hole.  We need massive investment in basic education, healthcare and other social amenities.  Unless this is done, the rapid urbanisation taking place all over Asia will create sprawling slums. These slums will become hotbeds for social unrest, eventually spawning ideas and ideologies antithetical to further growth and development.

15. There is nothing new under the sun.  A community which is unable to pull along those members who are less successful will eventually fall apart.  Some countries will maintain solidarity better than others.  They will make rapid progress.  Others will fumble and become mired in endless domestic political squabbles.  They will be left behind.  If we are not careful, their problems will infect us through refugees, terrorism, environmental degradation and the spread of diseases.  Take Myanmar as an example.  The reason why we cannot ignore what is happening in that country is because a breadown of society there will eventually affect all the surrounding coutries especially China, India, Bangladesh and ASEAN.

16. 21st Century Asia will not be homogeneous.  It will remain diverse with bright spots and not-so-bright ones.  There will be competition and cooperation at the same time.  The different economies will become increasingly inter-dependent and inseparable from the global system.  Capital and talent will flow freely to where they are most welcome.  Good ideas will be quickly copied and improved upon.  Cities will try to leapfrog one another.  Out of all this, a new Asian maritime civilization will evolve embracing all the coastal communities from Japan down the China coast through Southeast Asia to South and West Asia.  In some ways, it will be like the world of the late 19th and early 20th Centuries before protectionist and ideological walls were erected.  Such an Asia will welcome the friendship and participation of Americans, Europeans and others.

George Yeo

CONFEDERATION OF INDIAN INDUSTRY PARTNERSHIP SUMMIT

SPEECH BY MR GEORGE YEO, MINISTER FOR FOREIGN AFFAIRS OF SINGAPORE, AT THE CONFEDERATION OF INDIAN INDUSTRY PARTNERSHIP SUMMIT ON 18 JANUARY 2007 AT 1245 HRS

Singapore-India:

Roadmap to the Future

1 When I was Minister for Trade and Industry, I did not believe at first that a Free Trade Agreement could be negotiated with India. PM Vajpayee had proposed such an agreement during his Official Visit to Singapore in April 2002. During breakfast with Disinvestment Minister Arun Shourie the following morning, I told him candidly that my officials were dripping with scepticism. After all, it was not the first time that the idea had been mooted. Arun listened hard and, to my slight discomfort, replied that he would convey what I had just said to PM Vajpayee. I did not realize how serious the PM was. Negotiations began in earnest.

2 As was to be expected, there were many sceptics on the Indian side too. To them, only Singapore stood to benefit. What advantage was there for India? Singapore was already tariff-free. But, in fact, physical goods were only one part of the story. In any case, India's tariffs were coming down and India was only conceding to Singapore what it was prepared to give to all other countries eventually. Furthermore, as Singapore had no agricultural sector worth speaking about, the sector most politically sensitive to India was not affected. India stood to benefit from the services agreement and the establishment of a framework of trust which enabled it to access international capital more cheaply and attract foreign investments. When I mentioned to USTR Robert Zoellick and EU Trade Commissioner Pascal Lamy that Singapore was negotiating an FTA with India, both were sceptical that a good agreement could be reached. In the end, we were able to conclude a Comprehensive Economic Cooperation Agreement (CECA) which both sides were happy with. Since CECA came into force in August 2005, bilateral trade has shot up. Last year, it grew 40%. Singapore’s Foreign Direct Investment into India was also the second-largest in the first seven months of 2006, with total investments of US$520 million, according to India’s figures.

3 PM Vajpayee saw CECA in strategic terms. India had already embarked on a “Look East” strategy and closer links with Singapore facilitated the process. There was also an element of friendly competition with China. In December 2000, Chinese PM Zhu Rongji offered an FTA with ASEAN which caught the ASEAN Leaders by surprise. ASEAN Leaders responded positively the following year and at the ASEAN-China Summit in Phnom Penh in November 2002, a Framework Agreement was signed. PM Vajpayee was also in Phnom Penh for the ASEAN-India Summit at that time. To the surprise of his own officials, he told the ASEAN Leaders that India too would want an FTA with ASEAN. It was a bold move which signalled India's engagement of Southeast Asia.

4 When Dr Manmohan Singh became PM in May 2004, we knew in Singapore that while there might be some delay, the basic policy of India's engagement with Singapore and ASEAN would not change. This has become India's tryst with destiny in the new millennium - to become a major player in a re-emergent Asia. We had sensed this early when PM Narasimhao Rao set India on a new course in 1991. My Indian friends tell me that it was a move which Rajiv Gandhi would have made, had he become PM again. After PM Rao announced his new policy, both Dr Manmohan Singh and Mr P Chidambaram visited Singapore in October 1991 to speak at a seminar on India's future. Since then, Singapore positioned itself to be a long-term partner for the new India. In 1994, PM Goh Chok Tong initiated the establishment of the International Tech Park in Bangalore. That project quickly moved into Phase Two in November 2000 and has been a major success in our bilateral cooperation. Our partnership has received multi-party support in India, both at the state level and in Delhi. From the early 90's, Singapore also made a special effort to induct Indian talent into Singapore in the economic, academic and cultural fields. Many have come. This has refreshed our blood links. The new Indians in Singapore meld into our society with little difficulty. Some distinguish themselves in community work.

5 Our bilateral relationship is broadening and deepening. It is rooted in our shared culture and institutional inheritance from the Raj, and shaped by an alignment of strategic interests. History is bringing us together, again.

6 At the political level, it behoves Singapore to have India properly established in the new Asian architecture of the 21st century. Diplomatically, Singapore played an active role strengthening India's links with ASEAN and bringing India into the ASEAN Regional Forum and the East Asian Summit. Singapore also supported strongly India's inclusion as a Permanent Member in the UN Security Council. India's full participation in these and other initiatives will help to create a better environment for peace and development in the region.

7 India's improving links with China are good for the region. However, it is to be expected that the re-encounter of these two very big and ancient civilizations would not be a simple matter. It took over 40 years for the Nathu La Pass to be re-opened last year and this is but the beginning. Bilateral trade is growing dramatically. China is likely to be India's largest trading partner in the next couple of years. Investments are bound to follow in both directions. While China has offered a Free Trade Agreement with India, India prefers a more cautious approach. But the longer-term trends are clear. Stronger links between India and China will benefit the countries of ASEAN as we are the historical buffer in between. There is little danger that India’s links with China will grow so strong as to threaten us. If anything, India and China are careful not to be made use of by other major powers against their own national interests. An important reason why ASEAN countries pushed for the inclusion of India in the East Asian Summit is the creation of a larger environment for India and China to cooperate, not above our heads, but together with us in Southeast Asia.

8 Singapore therefore shares a strong political interest with India in building a larger framework of Asian cooperation. At the economic level, the cooperation between India and Singapore will grow in all sectors as our economies become more integrated. When CECA was being negotiated, Singapore’s objective, put in the simplest terms, was to restore the position of the Raj when trade and investments flowed freely between India and Singapore, and professionals were free to practise under similar laws, regulations and standards. We are not quite there yet. I believe that, in a few years' time, we will begin negotiating CECA Two. Between Hong Kong and Mainland China, they have a free trade agreement called the Closer Economic Partnership Agreement, or CEPA, signed in June 2003. The CEPA is based on a building block approach which provides a mechanism for liberalisation of trade in goods and services in phases. Hong Kong and the Mainland are now engaged in negotiating CEPA Four. In the initial stages, it was India, curiously enough, which feared being swamped by Singapore. In the future, it will be Singapore fearing that it will be swamped by India. But that we can now talk in these terms shows how much the world has changed and our bilateral relationship with it.

9 What India does with Singapore, it should eventually do with the rest of ASEAN as well. While negotiations for an India-ASEAN FTA are making progress, the process is slower than it should be because of a few agricultural products, principally palm oil. I hope that creative win-win solutions can be found so that the larger enterprise is not impeded. Singapore will continue to play a helpful role in this regard.

10 To use Senior Minister Goh Chok Tong’s metaphor, we in ASEAN view China and India as our two wings. We are eager to see both wings grow in tandem. ASEAN's trade with China grew from US$40 billion five years ago to US$130 billion last year. It is likely to reach US$200 billion by 2010. In comparison, ASEAN’s trade with India grew from about US$10 billion five years ago to about US$20 billion last year. We should try to double it by the year 2010. India’s trade with China has also been growing rapidly. Five years ago, it was less than US$4 billion. This year it is expected to reach some US$20 billion, about the same as India’s trade with ASEAN. The trends are clear. The economies of India and East Asia are fast integrating.

11 A stronger India will also have more influence in West Asia. Many Islamic countries, fed up by the treatment they receive in the West, are increasingly turning eastwards. Singapore's links to many countries in West Asia have strengthened significantly in the last two years. There are many areas where Indian and Singaporean businessmen can work together in West Asia.

12 Despite our small size, Singapore's presence in India is growing in a number of sectors. Singaporeans are good at system management. Singapore's experience in urban planning and management is receiving considerable attention in India. Singapore is particularly strong in logistics - air, sea and land - which is an area India needs to improve on urgently. For India's economy to reach double-digit growth, many bottlenecks must be cleared. As India's middle classes grow, as more and more Indians migrate to the cities, the country's social and physical infrastructure must be greatly improved. In many areas, Singapore can be a useful partner even though our experience is limited to that of a compact city-state. I like what former Andhra Pradesh Chief Minister Chandrababu Naidu once said of Singapore, that, small though it is, embedded in it is considerable complexity like nano-technology. One area in which India and Singapore are working together on is the establishment of Special Economic Zones (SEZs). Singapore has considerable experience in this area, having established successful SEZs in China and Vietnam.

13 I have talked about the excellent prospects for our greater political and economic cooperation in the coming years. Let me now talk about the prospects for greater cultural cooperation undergirding our political and economic cooperation. A few months ago, a book on the Indian Diaspora was published in Singapore, sponsored by Citibank, Jet Airways, Temasek Holdings, among others. That such a book was conceived and produced in Singapore should perhaps not come as a surprise. Some years ago, a similar book was published in Singapore about the Chinese Diaspora. Modern Singapore was established by the British East India Company for the China trade in 1819. Until 1867, Singapore was governed from Calcutta. The influence of the Raj in Singapore permeated every facet of life in Singapore. Many buildings, monuments, roads and bridges in Singapore today bear names which are better known in India than in Singapore. When the Japanese occupied Singapore in 1942, they tried to subvert British rule in India from Singapore by helping Subhas Chandra Bose establish the Indian National Army. Just two weeks ago, Singapore’s Deputy Prime Minister S Jayakumar was invited to the book launch of “Chalo Delhi”, the 12th and final volume of the Collected Works of Subhas Chandra Bose (Netaji), in New Delhi with External Affairs Minister Pranab Mukherjee and the former Prime Minister of India, I. K. Gujral. After the war, Indian independence had a major impact on Singapore nationalism. It was only during the period when India turned inwards that our links became attenuated but, even then, not as much as our links with China were weakened by the long years of Mao's reign. With globalisation, our cultural links to both India and China are blossoming again.

14 India's reflection in Singapore society goes down to every facet of daily life. Mustafa Centre, for example, is known by many Indians and NRIs. Early last year, I officiated at the inclusion of the Jains into the Inter-Religious Organisation in Singapore. Their community has grown and is now over 1,000. Just a few weeks ago, I attended the wedding of a Dawoodi Bhora couple at the Bhora Mosque. The men were separated from the ladies. I and my sons were the only ones wearing coloured shirts while everybody else was in white robe, white cap and mostly bearded. Not all were Singaporean. Many relatives and friends came from India. The bride's family had migrated to Singapore some years ago. I knew her since she was a little girl because her mother helped me in my electoral district. The groom was from Sri Lanka. Many threads from India are woven into the Singapore fabric and more will be in the future. Singapore's presence in India is also growing steadily.

15 In short, we can go long on Singapore-India relations. It is a mutually beneficial relationship which will benefit larger Asia.

George Yeo

Journey to India

1. I am flying this evening to attend a conference organised by the Confederation of Indian Industries (CII) in Bangalore. I will be giving a luncheon talk on the future of India-Singapore relations and taking part in a panel discussion on a provocative topic: Does the 21st Century Belong To Asia? There is a touch of hubris in that question. Bangalore is where we have a very successful IT Park. It was established in 1994. I did the groundbreaking for Phase 2 in November 2000. It is now an icon of India-Singapore bilateral cooperation.

2. After Bangalore, I'll be visiting Calcutta. West Bengal Chief Minister Buddhadeb Bhattacharya visited Singapore last year, impressing everyone he met with his progressive vision for the state. Do not be misled by the fact that West Bengal has been governed by the Communist Party for years. It has become one of the fastest growing states in India and keen to attract foreign investments. The Bengalis are an intelligent and articulate people and you can be sure that they'll interpret Marx in the right way. It was from Calcutta that Raffles founded Singapore. The Straits Settlements including Singapore were governed from Calcutta till 1867. During the Second World War, the Bengali nationalist, Subhas Chandra Bose or Netaji, established the Indian National Army in Singapore. There is a memorial to him near the Esplanade.

3. Then to Delhi to meet the new Indian Foreign Minister Pranab Mukherjee and others. Over ten years ago, I met Shri Mukherjee when he was the Commerce Minister. No Indian Minister has his range of experience having covered many portfolios in the course of his political career.

4. Instead of flying home from Delhi, I have decided to spend a day in Amritsar to catch the SIA flight home from there. The Chief Minister of the Punjab, Captain Amerinder Singh, was also in Singapore last year to promote stronger bilateral ties. The Punjab economy is flourishing. I've been told that the Golden Temple receives more visitors every year than the Taj Mahal.

George Yeo

ASEAN Summit

1. This evening, the Leaders of the ten ASEAN countries endorsed the recommendations of the Eminent Persons Group (EPG) on the drafting of the ASEAN Charter. The Group consisted of retired senior statesmen like Tun Musa Hitam, President Fidel Ramos and Pak Ali Alatas. Singapore's representative was DPM Prof Jayakumar. The members of the EPG sat in a row facing the Leaders. Tun Musa Hitam led off. The Leaders then gave their views in turn. Observing all this from behind PM Lee, I sensed a great moment, the conception of something quite historic. In a year's time, the Charter spelling out in legal terms the future of an integrated ASEAN should be signed and sealed in Singapore in time for ASEAN's 40th Anniversary.

2. Getting to this point took some time and a lot of effort. Countries do not come together out of  a sense of love. It is fear that drives us together. In ASEAN's case, it is the challenge of a rising China to our East and a rising India to our West. We are staking out for ourselves a place in the sun. The road ahead will still be long and difficult, but the course has been set. Despite problems big and small, our collective future looks good.

3. The ASEAN Foreign Ministers meet many times a year. As our national interests don't all coincide, it is natural that we don't always agree. Sometimes the disgreements can be quite intense. But, somehow, there's always enough goodwill for us to find reasonable compromises. On many big issues, we now share a common perspective. A strong cameraderic unites us which enables problems to be overcome more easily. This year, the Philippines is in the Chair. Less than a month after a typhoon caused the December meeting to be postponed, all of us are back in Cebu. My good friend, the Philippines Foreign Minister Bert Romulo, is hands-on, making sure that all details are attended to. His people have done a wonderful job setting the stage for our meetings. The Filipinos are a gracious people, always polite and friendly.

4. On the future of Asia, our strategy in ASEAN is clear. We have the ASEAN plus Three meetings which bring ASEAN and Northeast Asia (China, Japan,Korea) together. Last year, we launched the East Asian Summit which encompasses a larger circle including India, Australia and New Zealand - sixteen countries in all. For both sets of meetings, ASEAN is in the driver's seat by common consent. Beyond Asia, we have dialogue relationships with the US, Europe and Russia. While the big powers eye one another warily, they see us as completely unthreatening. We are such nice people in Southeast Asia.

George Yeo

Picture with Bert Romulo and Prince Mohamed

Value Investment and Speculations in the Flat World

Dear Readers,

There are few comments on Beyond SG but based on the access statistics - the readers are there. We have a daily hit rate between 100-120. The following is a reply to an excellent comment made on my posting about the New Rich of 2020. I thought I should post a fresh posting instead of merely replying to Mr. Nameless. Attached is his comment:

(Harold,)

if everyone thinks that way, the property market will eventually collapse ( not that it hasnt hurting a great many in the process ), resulting in high social economic ramifications blah blah blah and with thousands already burnt to charcoal, investors/PRs should also wise up and stay away from our property market since it is a stupid idea like you said hmm...i think we all should revert back to cheap kampung housing or move up north where cheap properties can still be had?

Mr Nameless

Dear Nameless,

I understand where you are coming from and the logic behind your comment. However, as a businessman and fund manager, I can't think along those lines. Warren Buffet, the most astute value investor in the world, often said that anything other than value investment is speculation. In fact, he thinks that adding the word "value" in front of investment is illogical because investment by default is hunting for value. You seldom say wet water or hot fire :-)

1. People will not think the same way. We can write a thousand articles, backed by statistics, data points, and historical trends and yet there will be people who believe that they can win IN THE LONG RUN in casino, horse racing and astrological stock picking (investing based on positions of the planets!!!). So there should be no worries that Beyond SG is so influential! As an entrepreneur, I have met people who believe that they can FEEL which horses can win the race (and they are still terminally broke.) So when it comes to investment and speculation, there is always freedom of thoughts and actions.

2. The posting is against buying overpriced assets (in this case, property). It is never against buying undervalued assets. Those who buy Sentosa Cove and had the foresight before it was known to everyone, made money. It is those (a) who are late in the game, (b) really got not much money but go super-leveraged, (c) no certainty that they can be well-paid all the way to 55, (d) follow the speculation fever - well, these folks are really in trouble and should, perhaps, rethink their strategies. Not even talking about harsh life when they are old, we are talking about a very, very stressful retirement when they are old - downsize of their lifestyle, accommodation size and almost everything. There is such a group out there if you care to meet them - silently suffering because they used to invite you to their condos, drive flashy cars and travel to Europe/Korea/China every few months. They did nothing wrong except for making some bad financail decisions.

3. A fundamental tenet of an investor or businessman is to look at facts and assets dispassionately. If an asset is underpriced, it does not matter where it is found (although I stop short of

North Korea

and

Iraq

but then again, the valuation MUST take into account political risk and therefore, they may still be overpriced after factoring the various risks). Hence, you are correct. If

Malaysia

has cheaper properties, then it should be a viable investment. I find this line of thought quite interesting and will digress a bit here. If I say

China

and

India

properties or investments are good, Singaporeans tend to nod in agreement. But if I say

Malaysia

investment is good, they frown. I very much suspect we take a lot of direction from the government. I recalled meeting a senior official in the street and he asked my CEO if his business is in

China

. My CEO said no, we are in

South East Asia

and

Middle East

(that was BEFORE

Middle East

was cool). The official shook his head sadly as if we were doomed and said, "You got to be in

China!

" like some wise sage. This is the kind of thinking that may not serve us well in the Flat World. In fact, a few of our competitors went to

China,

were promised billions of customers and instead, they lost their way just trying to smoothen their way into the complex systems. They have since exited and lost a few million dollars. Investing in

China

or

India

or

Vietnam

or

Middle East

is not wrong but it should be evaluated dispassionately without crowd thinking and lemming effect. I am always curious - what if on April Fool's Day, a few top officials launched a campaign to say, "Invest in Antarctica because Penguins are cool" and we interview Singaporeans in the streets, civil servants, business leaders, community leaders, principals, teachers and students and see what is the general reaction? I wonder how many people have the courage to say, "That is the stupidest idea I have ever heard!" Or you hear things like, ".... hmmmmm, I think it is a good idea because er... and we should encourage young Singaporeans to take risk and be entrepreneurs, you know, learn to wear warm clothes to prepare themselves in the hostile conditions!" It can be funnier than "Borat". But I am also confident that Singaporeans will speak their minds these days!

Here is my simple stance on global investment. The entire world is a possibility. Politically or businesslink wise, be nice to all (except the really bad guys.) Period.

4. Nah, Kampung may not be so cool. We actually have high tech versions of Kampungs - they are fairly priced, clean, well-designed, well-maintained and have lower entry price - they are called HDBs (government housing for our foreign readers). Some of the new HDBs look so good that it is difficult to tell the difference between a private condo and a government flat. Some of them actually win design awards. So there is no need to regress - our existing housing infrastructure is pretty attractive.

5. A few of my pals who follow the BeyondSG postings wrote to me about "How to become the New Rich in 2020" and whether I am sure about my predictions. Haha. I am no oracle and I don’t have a crystal ball as much as I would like to. But the facts, logic and wise sayings of many speak for themselves.

a) An overvalued asset like property is called a liability. This wisdom did not come from me; it comes from "Rich Dad, Poor Dad".

b) Two integrated resort projects will certainly increase jobs and investment in

Singapore

. It is a very good thing. But having a casino/integrated resort/amusement park cannot equate a sustainable increase in property prices or other asset prices. It is like saying because there is Genting Resorts in

Malaysia

, the economy in

Malaysia

MUST do well and property prices will rise. Such logic is flawed.

c) Corporate downsizing is the norms. Harvard, last year, published some papers that the real executive class (the thinkers,CEO, directors, board members, owners and the top decision makers) is getting smaller and getting MORE well-paid and the non-executive class is getting larger, less well-paid (and probably replaceable). They suspect this will be the new global trend.

What do you do if you are an average kid like me? I will be very conservative and will not speculate. I will invest in value funds and avoid all the financial fads I don’t understand. And here is the beauty of being the New Rich in 2020. By doing nothing much and nothing too clever and dangerous, this strategy will, in all probability, put us in the New Rich in a relative sense. And more importantly, (and this is my fault, I should have clarified earlier), the New Rich is not just in the material sense. Rich in terms of a meaningful, stress free and happy lifestyle. Not worrying about your loans, medical bills, children school fees and having time to smell the roses, read a book, help a charity, contribute to society - that to me, is the new Rich of 2020.

Harold Fock

The New Rich Club of 2020 or How to price real estate in 10 seconds?

It is scary to watch people queuing to buy prime area condominiums in Singapore recently. They are not buying properties. They are speculating and hoping to make a quick buck. There are so many lessons GLOBALLY on people being hurt by real estate speculation, that you really wonder why humans never learn from history.

Watching people queue to speculate on properties is as scary as watching people watch WWF or wrestling matches. There is nothing wrong watching our favorite WWF heroes choking each other to "death" at the arena. That is not the really scariest bit. The scariest bit is when they think it is real.

There are enough cautionary articles in the newspapers (thanks goodness) to explain why a valuation of S$3,000 per square feet (psf) is almost suicidal in terms of risk and return. Rather, a good friend of mine, Cheong Hian, has come up with an Idiot proof 10-second valuation rule. It goes like this:

Since a condominium unit is really a space in the air and you have 99 years to occupy that space, imagine a 3-D space in the air, ignore all the glitzy computer graphics and the pretty sales consultants, ignore the Feng Shui "face north" is good (or whatever mumbo jumbo), ignore the Spa-like swimming pool and the Club-Med facilities (you won't use it anyway because you are too busy working hard to repay the loan; it is only useful in the first "house warming" party, the bragfest event before you are enslaved to your property), ignore the news of how someone made a killing speculating the Sentosa Cove (those guys have first thinkers' advantage, not you), put that all aside and focus on the suspended virtual space in the air and ask yourself this:

Is it worth paying this space at S$XXXX for an option to use it for 99 years and will someone looking at it with the same perspective as I do pay MORE?

You may walk out empty-handed but it may be the cleverest thing you ever think about. Come to think of it, the above may be the BEST ADVICE Beyond SG can offer to our gentle readers!

I have another good friend cum mentor, Heng C.M. who was my former colleague back in MAS. He is very interested in financial planning and he shared this scary story to me once. He said that out of curiosity, he started evaluating the financial situations of many Singapore yuppie couples and many of them are suffering from financial terminal cancer and they still dont know it.

I think this is a maths problem. I think the financial maths (the way we compute, not the method) we use still harks back to the good old days when you will have a nice retirement ceremony at 55. It makes assumptions of a world when you will be given a Rolex watch for loyal 25 years service. The new world cannot make such assumptions. You have to assume the evil cost-cutting CFO (by the way, that is my daytime job) is targeting you at 42 years old when you have a condominium (my impolite friends called them the Condom. Heroes), a branded car (Alpha Romeo, ok, no more puns), two children preparing for JC/University, a maid and a huge salary the CFO wishes to reduce. He knows you will beg for mercy when he strikes and you probably can't find a better job. CFOs, by default, love to see people beg. Those who dont just dont become CFOs.

Hence, if you rework the financial maths and assume your earning capability ends at 45 or more conservatively, at 40, and make preparations for such a scenario, your life will be much happier, more fulfilling and less stressful. I think the schools are teaching our kids (Gen Z, Z1, Z2?) to lower our expectations these days that but for us, the Gen X and Y, we are taught the wrong things. Many wrong things.

So the second most important question you should ask yourself is this:

When I am forty-five, will my employer still pay me equivalent money to stick around?

Ask these two questions at the condominium sales office/the mock up units and one thing for sure, you will be the New Rich Class in 2020. Oh, and ignore the babe with the Oxley sunglasses at the top of her head snobbing around in the showroom and pretending to be the New Rich. Once she signs on the dotted line, statistically speaking, you win :-) See you at the Singapore New Rich Club in 2020!

Harold Fock

4 'C's in a Diamond and 3 'R's in a Singaporean

I am always fascinated by diamonds. It is not a rare commodity. It is not really precious because it is compressed carbon, after all. In fact, it is easier to find/mine/process diamonds than many other precious metals. Diamonds are the most incorrectly valued commodity in the world and they defy economic forces known as supply and demand. You can almost throw away your Economics 101 textbook when dealing with diamonds - ever wonder why economists teach economics using "widgets" (not the internet term but the old meaning to mean a hypothetical trade-able object) instead of real stuff? The idea is to prevent smart asses from asking too many questions.

This is one of my favorite questions at parties and functions especially when there are lots of women. What is the price of an unpolished diamond, say, 1 carat? A few learned ones (especially the rich tai tai) will say "It depends. You told me only the first "C" but there are 4 "C"s in a diamond. Carat, Cut, Color and Certification. Give me more information about the colour, any visible defect, the cut etc." My reply is average color, average cut and normal certification. In any case, it is your average unpolished, raw diamond.

And the answer is, "About US fifty-five dollars ONLY." If you read the Fortune magazine (article titled "Diamonds aren't forever"), it gave the answer in a round-about way. Deep down, it makes sense. Think about all the middlemen costs - the polishing and cutting (cant be too much because you KNOW craftsmanship cant be too expensive these days), the shop rentals, the advertisements, the ever-polite sales staff, the transport cost, insurance cost, the "wholesaler" and "distributor" costs and so on. And of course the fantastic profits made by the jewelry shops. Work backwards and you realise that Diamonds are not the Girl's best friends but the Middleman's and Marketer's

Another trick to impress the female crowd is that you, the nerdy PC-loving, gadget man can actually price any diamond-based jewelry, down to 15% price variation. Just take any diamond bracelet, ring or ear stud and the pricing rules work like this (in SINGAPORE DOLLARS). This works best when it is not a single BIG diamond (and not from Tiffany) but say, a diamond studded bracelet:

1. If the diamond is so small and you have trouble seeing it, add S$20.

2. If the diamond is big enough to be seen but not the "rock" level, add S$50

3. Add up all the small and big diamond and that is the retail price of that piece of jewelry. You don’t even need to compute the workmanship and other costs.

You will be amazed at how close you reach the retail price and the lady guests will see you in new light. A SNAG nerd that can price jewelry? Wow! Like the movie "Borat", you need not drive a Hummer to be a babe magnet, you are the Babe Magnet! (If you really need to be nice, price it incorrectly on the high side and you look smart and gentlemanly at the same time :-)

For more information about the diamond trade, please see http://www.theatlantic.com/doc/198202/diamond

Why talk about diamonds in Beyond SG? Because in the new, new economy in which “any manufactured product is a commodity”, perception may be everything. A China and India-based manufacturer can compete on pricing in terms of craftsmanship and logistics cost, but they really have no weapons against something like De Beers "A Diamond is Forever" marketing campaign that elevates diamonds to a luxury status symbol. You can easily cut a company’s operating cost by outsourcing to China and India but you can’t easily change the perception of your products.

Another quintessential example is Tiffany & Co. - the magical turquoise branded luxury goods company. Do you think they are selling jewelry? Nope. They are selling turquoise boxes because whatever you put inside the boxes will illicit a joyful reaction from the recipient. Sorry, Tiffany & Co and to all the girls who wear Tiffany proudly but that is branding at its best.

George Yeo wrote an article in Ephraim's site (emphraim.blogspot.com) about global competition in light of China, India and Vietnam's participation and how to stay alive in this new landscape. My 2 cents is this – for Singaporeans (or citizens of any small country), you need the 3 Rs – Reputation, Reliability and Resolution. Reputation is like De Beers or Tiffany branding. It is a perception that you can complete a project and do good job without any scam or cooking the books. Reliability is beyond pricing. I know my Swiss watch will outlast any cheap China-made watch and although quartz technology means a China watch is no different from a Swiss watch in terms of accuracy, somehow I feel it is more accurate and reliable. Again, perception comes in. Last but not least, I need to know you will stay and fight and won’t run off at the slightest difficulty or smallest improvement in monetary rewards. I need to know you are determined to win. My colleagues who behave like this in my company get the fastest promotions.

I think in the New, New Economy, people or countries that possess the 3 Rs will thrive despite the china and India “pricing bomb”. We are rare, we are precious and we last forever. That is the new thinkspace we need to occupy. This should be our global branding as a people and a workforce. Think Tiffany and De Beers. If you don't possess the 3 Rs, at least learn to fake it. (Think of all the Ivy League-schooled consultants and all the quick-talking Wall Street Market Strategists:-)

Diamonds may be the girl’s best friends but to entrepreneurs, the diamond trade can be our best tutors.

Harold Fock

"Diamonds are precious...... Not"