TEMASEK'S ongoing investment woes over its stakes in Indonesia's two biggest mobile telcos bring to mind some simple, eternal facts of corporate life.
First, investing abroad has always carried the risk that assets can be seized by foreign governments.
HSBC and Jardines lost control of their Chinese assets in 1949 when communists came to power in the mainland. In the 1960s, the Australian government forced mining firms to "Australianise" their shareholdings, upsetting the then predominantly British shareholders.
And just last year, energy companies operating in Venezuela and Bolivia had to accept new and less advantageous contracts to avoid cancellation. Shell and BP, too, have had their share of problems — in Russia.
Second, investments in banking and telecommunications (two of Temasek's favourite sectors) have three major weaknesses. Value in these sectors can be easily destroyed by government action or inaction. Both sectors are highly regulated because most governments regard them as "strategic industries". Nationalists are also sensitive to foreigners owning big stakes in these sectors.
The controversies surrounding Temasek's acquisition of Shin Corp — the telco once controlled by the Thaksin family — and the two investments in Indonesia's Telkomsel and Indosat, illustrate these weaknesses vividly.
And it is difficult to exit major investments in these sectors. Whatever the law may say, any sale must have the blessing of the host government. If Temasek wants to cash in on the huge returns it has made from its 6-per-cent stake in China Construction Bank or its 5-per-cent stake in Bank of China, potential buyers would want the assurance that any sale was acceptable to the Chinese authorities.
Third, most countries, developed and developing, have a history of economic nationalism. Who can blame Asian nations for being afraid of foreign investors?
India, Indonesia and South Korea were colonies of Britain, the Netherlands and Japan respectively for almost half of the 20th century, and in the first two instances, the whole of the 19th century. The British and French interfered extensively in Thailand while China was bullied and occupied by the Western powers and Japan.
And don't forget that the British and Dutch began as traders before becoming colonisers.
Incidentally, Britain and Australia, at least on the surface, seem to be the only two countries which are not too worried about foreigners owning major stakes in "commanding heights" companies. British ports, airports, power stations, water utilities and financial institutions are owned by foreigners.
The British appear to have adopted this attitude: If foreigners are prepared to pay huge sums for assets that cannot be moved, the locals should take the money and invest it elsewhere.
And if the foreigners have overpaid — as some analysts believed was the case in the purchase of the British Airport Authority, where the winning consortium, which included the Government of Singapore Investment Corporation, paid £10.3 billion ($30.6 billion) — and are having operational and funding problems, that's their problem.
So, sceptical of foreign investors in general, many people in these nationalistic countries are naturally concerned when a firm owned by a foreign government invests in their country.
They tend to project their personal and historical experiences and prejudices onto the investing firm — and that is their governments interfere in state-owned and private businesses.
For example, China, India and Indonesia have forced banks to lend liberally to state-owned companies; while the South Korean government once directed Korean banks to lend money to privately-owned conglomerates to help them expand overseas. Profits are secondary. National, political or strategic considerations are more important.
So, even though Brand Singapore has a reputation for straight-talking and honesty, a statement like, "all the companies in our portfolio are independently managed with responsibilities to their respective board and shareholders", would be met with a shrug or a wink — "they would say this, wouldn't they?" Anyway, governments and policies can change.
Next, good governance — political or corporate — is rare outside the developed world. We forget this at our peril.
Last week's Weekend Xtra on the Indosat/Telkomsel case describes the alleged skulduggery that seems to be going on in the background — of inconvenient evidence being ignored and of prejudgment of the case.
It doesn't reflect well on Indonesia's investment climate; but to be fair to Indonesia, there are countries where worse things are alleged to have happened.
Finally, don't expect gratitude, especially if one makes money. Temasek itself and its 56-per-cent owned subsidiary SingTel made major telecom investments in Indonesia when other investors didn't want to know about the country.
One could be forgiven for thinking that Indonesian nationalists should be grateful that firms from an Asean neighbour bought these assets, not some insensitive investor from a Western country with a history of exploiting the "natives".
Incidentally, Temasek's problems over Shin Corp and Indosat/Telkomsel reflect difficulties Asean could face in plans for an integrated economy.
If Thailand and Indonesia, two of the more developed Asean economies, have problems in accepting investments in their telco sectors from a fellow founding Asean neighbour, what chance of success in other areas like aviation, financial services and logistics?
Adrian Tan is a freelance financial writer. ADRIAN TAN
Mr. Wong Kan Seng Minister for Home Affairs New Phoenix Park, 28 Irrawaddy Road Singapore 329560 wong_kan_seng@mha.gov.sg
Dear sir,
I would like to refer you to the incident that occurred on 20 November 2007 along Orange Grove Road when Mr John Tan and I were illegally detained by the police.
The intent of this letter is not to inform you of the incident as I am certain you have been quite thoroughly apprised. Instead I would like to seek several clarifications from you as the Minister for Home Affairs.
Although Mr Tan and I were told that we were in a Protected Area, at no time did the police say that we were trespassing or forbidden to be in the vicinity. None of the police officers were able to cite any law that prohibited us from going to the Shangri-la Hotel.
What right did the police have to stop Mr Tan and I from going towards the Shangri-la Hotel after having been told that we were going there for a meal?
When asked if we had committed any offence and if we were being arrested, we were categorically told “no” to both questions. That being the case, what right did the police have in man-handling and forcing us into a vehicle?
If the vehicle belonged to the Singapore Police Force, why was it unmarked?
Was it legal for the police to take us to a place against our will when we had not committed any offence?
What right did the police have in not only harassing but manhandling Mr Tan and me?
What right did the police have in forcefully taking us away to a place when we were not under arrest?
In addition to this, Mr Tan was prevented from leaving the police vehicle when we were brought to Orchard Hotel? The police had restrained him and he had to physically struggle with the officers to get out of the van. Is this not a form of physical abuse?
The actions of the police in the mentioned incident is a grave violation of our constitutional rights, individual liberties and personal security.
How can it be said that the Singapore is built on the rule of law when those of us living in this country can be subjected to such arbitrary, illegitimate and physical actions by the police?
WITH the number of new citizens and PRs expected to outstrip last year's record figure of 70,500, cracks are already appearing not just between different ethnic groups, but also within races.
This sobering observation came from Senior Minister Goh Chok Tong, who was speaking at the 10th anniversary of the Community Development Councils (CDCs) on Friday, as he outlined the challenges facing them.
Mr Goh related how there are already signs of Singaporeans lowering their trust towards one another.
At his annual reception in his Marine Parade constituency for new citizens and PRs, Mr Goh noticed how "the new residents did not mix easily with Singaporeans" and Singaporeans, in turn, "tended to leave them alone".
And within the Chinese and Indian communities, crevices are deepening.
Said Mr Goh: "In terms of accent, culture and habit, Chinese Singaporeans are different from their PRC counterparts. As for Indians, I have heard that the Indians from India tend to bring their caste culture with them, and that some of them sometimes come across as sikit atas (slight air of superiority) to our local Indians.
"On the other hand, some Indian Singaporeans also display the same attitude towards the many low-skilled workers from India."
Citing the studies of Harvard University political science dean Robert Putnam, Mr Goh said that the phenomenon of "hunkering down" takes place as a society becomes more diverse and multi-cultural. Left unchecked, it would reduce social solidarity and erode community trust. For example, people will have a lower likelihood of giving to charity or volunteering.
And as Singapore must continue to open its doors to new immigrants to boost its population and economy, Mr Goh hopes the CDCs would "find ways to bond new Singaporeans and PRs to our people".
He also identified two other social divides that must be bridged: That between less well-off and more successful Singaporeans, and also the gap between the elderly and the young.
Said Mr Goh: "We must involve more successful Singaporeans in a concerted community effort to help the poor and the dysfunctional families."
Likewise, Singaporeans have a critical role to play to help senior citizens lead active lives.
Apart from employers, the mindset of Singaporeans towards their elderly parents must also change.
He added: "Children sometimes discourage their own elderly parents from leading active lives … . In truth, the 60-year-old of today is very different from the 60-year-old of 20 years ago."
Mapping out the priorities for the CDCs, Mr Goh said they must enlarge the common space which brings together Singaporeans and immigrants.
On top of intra-group bonding within faith-based organisations or various professional and interest groups, the CDCs have to "encourage inter-mingling" between the disparate groups.
CDCs should also engage in "preventive intervention", instead of providing "downstream pain relief".
One positive example is the Home Ownership Plus Education programme, which helps families become self-reliant through housing and training grants, as well as education bursaries for their children to help them break out of the poverty cycle.
Likewise, efforts to promote active ageing should begin before retirement, said Mr Goh.
While there are existing programmes to address these social divides, Mr Goh called on the CDCs to do so "holistically".
Otherwise, he said, Singapore's social unity would be "eroded gradually and imperceptibly but with long-term implications on the harmony of our society".
SINGAPORE (Reuters) - Carol John, 27, doesn't own a bed. Every night she sleeps on thin mattresses which she shares with her three young children. Outside her one-room flat, a smell of sewage lingers in the common corridor.
Just a few kilometers away, on Singapore's Sentosa island, Madhupati Singhania relaxes on his $435,000 yacht berthed at the city-state's swanky One 15 Marina Club.
Income inequality is nothing new in free-market Singapore, but two years of blistering economic growth and a government policy of attracting wealthy expatriates have created a new class of super-rich, while a string of price increases for everything from bread to bus fares have made life harder for the poor.
"I can't save anything, it's so difficult for me," John told Reuters. John, who is unemployed, relies on her husband's S$600 (US$420) monthly salary and a S$100 government handout.
"We don't benefit at all from the economy. As far as I know, my husband's pay hasn't gone up," she said.
Singapore's economy is firing on all cylinders, with a booming construction sector, record tourist arrivals and a fast-growing financial sector all contributing to a gross domestic product set to grow nearly 8 percent in 2007.
But the rising tide is not lifting every boat.
The proportion of Singapore residents earning less than S$1,000 ($690) a month rose to 18 percent last year, from 16 percent in 2002, central bank data released late last month show.
At the same time, the proportion of those earning S$8,000 and above rose from 4.7 percent to 6 percent in the same period.
"When a country becomes richer, you tend to see a widening of income inequality. Over the last few years it has been worse," said econometrics professor Anthony Tay at SMU university.
Despite sporting a first-world GDP per capita of $29,000 -- second only to Japan in Asia -- Singapore has an income inequality profile more in line with third-world countries.
Singapore's Gini coefficient, a measure of income inequality, has worsened from 42.5 in 1998 to 47.2 in 2006, and is now in league with the Philippines (46.1) and Guatemala (48.3), and worse than China (44.7), data from Singapore's Household Survey and the World Bank show.
Other wealthy Asian nations such as Japan, Korea and Taiwan have more European-style Ginis of 24.9, 31.6 and 32.6.
FAST CARS, BIG BOATS
CIMB-GK Research economist Song Seng Wun believes that growth itself partly explains the widening income gap.
"In an environment where growth is huge, there are lots of opportunities for risk takers, and inevitably, you will get this widening (of the income gap)," he said, adding that those in stable jobs will also benefit, but to a lesser extent.
Opportunity is what attracted Singhania to Singapore. He intends to buy a new 47-foot yacht for $1.3 million.
"You've got everything you want in Singapore. You want to buy a fast car, you want to buy a big boat, you want to buy an aeroplane, whatever you need, you can get in this country."
Singhania, who runs a business consultancy firm, was originally from Mumbai but decided to move to Singapore and become a Singapore citizen, citing its first-world comforts.
The Asian Development Bank blames the widening income gap in Singapore and many other Asia countries partly on globalization, which it said favors the well-educated, and recommended policies to create more equal opportunities and wealth.
Singapore's government has made the reduction of the income gap a priority, but argues welfare should not be a crutch, and rules out unemployment benefits or a minimum wage.
While the ruling People's Action Party is in no danger of losing its stranglehold on parliament, the growing income disparity has hurt its credibility.
"There is definitely envy, but this is not enough for civil disturbance," said sociologist Ho Kong Chong at NUS university.
"These emotions of despair and desperation are missing in Singapore because of the government's housing policy and transfer payments," Ho said.
Singapore's extensive housing program provides owner-financed flats in government-built blocks and the state also provides modest income supplements to those in low-income jobs, although there are no unemployment benefits.
Carol John, who left school when she was 15, does not know much about support schemes. "In the years to come, I'll just leave it in God's hands, whatever he gives me, I'll take it."
SINGAPORE: Minister for Trade and Industry Lim Hng Kiang told Parliament on Monday that the Consumer Price Index (CPI) is set to reach a high of five percent in the first half of next year, though prices are likely to ease afterwards.
He explained that prices have gone up because oil prices have doubled since the start of the year, and the one-off hike in Goods and Services Tax (GST) in July also contributed to the rising inflation.
But the CPI, which measures inflation at the consumer level, is expected to go down to three per cent in the second half of 2008, Mr Lim said.
Another factor driving inflation has been the disruptions in the supply of food items such as vegetables and diary products from Australia, Malaysia and Indonesia.
Mr Lim said: "Diversifying our food supply sources is one way we can reduce our vulnerability to such supply disruptions and maintain more stable food prices.
"AVA (Agri-Food & Veterinary Authority) will continue to step up efforts to this end. However, diversification cannot protect us against a worldwide increase in food prices, as is happening now."
When MP Halimah Yacob asked what the government has done to ease the inflationary impact on Singaporeans, Mr Lim pointed to measures such as the GST Offset Package, which is expected to cost the government S$4 billion over five years.
The government's exchange rate policies have also helped minimise the impact of inflation from other countries.
But Ang Mo Kio GRC Inderjit Singh asked: "Does the minister see any impact on our competitiveness here as far as businesses are concerned?"
Mr Lim replied: "We are tracking our competitiveness position very closely and so far we are in quite a good position for several reasons... even though (our inflation rate is) higher than what we've been experiencing, it's still lower than other countries...
"Second, even though wages have gone up last year and particularly the first three quarters of this year... (over) the last five, six or seven years (they did not go up) so rapidly."
Mr Lim added that the higher inflation should also be viewed against the backdrop of rapid economic growth rates since 2003, so it should not be surprising to see inflation rise above the "unusually low levels" seen over the last few years. - CNA/ac
IF former Permanent Secretary Ngiam Tong Dow had his way, Singapore would think twice before beefing up its population to 6.5 million people.
In a candid interview in the People's Action Party's latest Petir newsletter, Mr Ngiam — while stressing that "my role is to give an alternative, not an opposing view, to government policies" — questions the rationale behind the new target. Singapore doesn't need numbers, it needs talent, he said.
Pointing out that managing the population is the main challenge facing Singapore, the 70-year-old said: "If we do it wrongly, it will change our economic and social system."
Some 40 years ago, while serving on the Economic Development Board (EDB), he and others had studied the question of an "optimum size" for an industrial country.
Said Mr Ngiam: "We looked at successful small countries such as Sweden, Norway and Israel. They each had a population of six million. So we said Singapore needed to have six million people."
But given the technological advances and rising educational levels, Singapore "no longer needs numbers now but more quality", he added.
Mr Ngiam said he was told that the number "was based on Gross Domestic Product growth of six per cent a year".
"A back-of-the-envelope calculation would show this comprises a 2-per-cent increase in population and 4-per-cent growth in productivity. But if we can increase our productivity by more than 4 per cent, we can still have 6-per-cent growth, but with fewer people who are highly productive."
He stressed the need to appeal to people's hearts. "Otherwise ... Singapore will become just a six-star hotel where guests stay in good times and flee when times are bad. We will never become a nation," he said.
His vision: Set up a think tank to "think strategically" on top of tactics such as dual-citizenship and a more broadly-defined concept of National Service. "For instance, a foreign Singaporean living overseas should have no voting rights and less national service obligations."
The Government could even invite former citizens for "a month-long holiday" to advise policymakers on areas in which they have specialist knowledge. Said Mr Ngiam: "Do you know Chinese Nobel Prize winners are invited to China to teach for three months?"
"Our population policy should be more emotional ... You don't say to Singaporeans who are no longer citizens, 'You come back, we have a job for you'. You say, 'What about contributing your knowledge to Singapore? Better still, you want a job, we give you a job'."
THE number of foreigners becoming either Singapore citizens or permanent residents will likely hit a new record this year.
And the upswing will go some way in tackling Singapore's population problem, a key long-term challenge.
About 7,300 Singapore citizenships were granted in the first half of this year, Deputy Prime Minister Wong Kan Seng told The Straits Times.
If the trend continues, Singapore will have 14,600 new citizens this year.
The figure is about 10 per cent higher than the record 13,200 citizenships granted last year. In 2005, 12,900 citizenships were given.
These numbers are a big jump from the typical tally of 8,000 becoming citizens annually in the previous four years.
More foreigners are also seeking the benefits of permanent residence. Some 46,900 of them were granted PR status in the first nine months of this year, compared to 57,300 for all of last year.
With falling birth rates and an ageing population, Singapore has been trying to attract foreigners to settle here.
As chairman of the National Population Committee, Mr Wong has been tasked with tackling the problem.
He said the new immigrants hail predominantly from South-east Asia, as well as South and East Asia, an 'understandable' pattern as they tend to share similar linguistic and cultural backgrounds with Singaporeans.
One such new citizen is former Chinese national Wang Jie, 43, who took up citizenship this year, together with her university lecturer husband and their 17-year-old son.
The main draw for them: Singapore's education system.
'My son's studies have improved since we came here because the teachers are much better,' said Madam Wang.
She is also getting a second wind in her career as a Chinese language tutor thanks to strong demand. 'I even have plans to open my own tuition centre,' she said.
The new citizens and PRs add to a pool of Singapore residents whose number stands at 3.68 million as of June. This is out of a total population of 4.68 million.
The remaining one million foreigners include 756,000 who are working. There are 110,000 here on an Employment Pass or S-Pass, and 646,000 on Work Permits.
While the newcomers add to the much-needed population numbers, social stresses have also resulted.
For instance, property agents have noted the formation of ethnic enclaves in certain housing estates. Singaporeans have also complained about competition for jobs.
But Mr Wong said Singaporeans should recognise that immigrants are part of a diverse workforce that will enhance Singapore's standing in the global economy.
'Our challenge is not the number of jobs available; it is that we do not have enough people to match the current rate of job creation,' he added, pointing to full employment numbers here.
On whether more could be done to inculcate in foreigners the ways of Singapore, he said he believed Singaporeans generally welcomed them. 'While there is no need to pretend that there are no differences between new immigrants and native Singaporeans, we should recognise that and accept that integration takes time and effort.'
He cited ongoing outreach efforts by schools, grassroots groups and expatriate bodies but added that there was also 'only so much the Government can do on its own'.
'Integration is a dynamic process that requires sustained efforts across all segments of society,' he said.
Sociologist Tan Ern Ser is sanguine about the challenges of integration. 'My sense is there is already a process of self-selection in that only those who could adapt and integrate would choose to settle down in Singapore.'
