by Martin Abbugao, AFP, 27 Apr 2008

SINGAPORE (AFP) – From taking fewer taxi rides to eating out less and shortening shower time, residents of affluent Singapore are trying to cope with inflation, which has soared to 26-year highs.

Rising costs of housing, food, and transport have eaten into family budgets of Singaporeans as well as the large number of expatriates working in the city-state, consumers and analysts said.

Except for the ultra-rich, the impact of the sharp price increases has cut across social classes in one of Asia’s wealthiest nations, they said.

Government figures show Singapore’s annual inflation was at 6.7 percent in March, the highest since 1982, boosted by higher costs of food, transport, communications and housing.

The figure is more than double the inflation rate in Malaysia and higher than that of the Philippines, Hong Kong and Australia. Unlike bigger countries in the region, Singapore imports most of its needs.

“When the inflation rate is high, it affects everybody,” said Serena, a businesswoman who lives near the prime Orchard Road shopping and would only give her first name.

Serena said even affluent families like hers have had to adjust to the rising costs by eyeing grocery prices more closely, using the car less and eating in fancy restaurants only on special occasions.

“You have to differentiate between needs and wants, what is necessary and what is not necessary. If you can get something cheaper, you don’t have to go for branded (luxury) items,” she told AFP.

While soaring inflation in developing countries, amid a global food crisis, has left many struggling to feed their families, Singaporeans are dealing with the impact of price hikes in their own ways.

For Janice Tan, 35, who works at a travel agency, the soaring prices have forced members of her family to shower only once a day to cut their water bill. Water used to rinse vegetables is recycled to flush the toilet.

To reduce the electric bill, Tan said she told her maid to iron only office clothes — and just the parts that are visible.

“It’s a big deal for Singapore in that we have never had inflation higher than three percent,” said Euston Quah, head of the economics division at Singapore’s Nanyang Technological University.

“It hits the poor badly because the poor spend maybe 40, 50 percent of their income on food,” he said.

Quah sees inflation eventually easing to around 4.5 to 5.5 percent this year, while the government has forecast 2008 economic growth forecast of 4.0 to 6.0 percent.

Amin Sorr, 65, who works with a shipping firm, said life has become harder, especially for those earning less.

With a monthly salary of 3,000 Singapore dollars (2,200 US), Sorr said he can cope, but friends pulling in 2,000 dollars or less are struggling.

“I know a lot of friends who have problems with their water bills… and even personal credit lines.”

Local charities say rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.

Salamah Salim, 40, who runs a food stall on the fringes of the business district, said: “Our expenses on food and rice have more than doubled over the past year. Rice and oil have risen tremendously.”

Even expatriate professionals, particularly those with less generous housing allowances and other benefits, have been hit.

As apartment rents surged, some moved their families from condominiums that come with swimming pools, gyms and barbecue pits to cheaper government-built flats without such resort-style amenities.

“They raised our rent by 150 percent after our contract expired late last year,” said a Filipino computer engineer, who transferred from a gated condominium to a government-built high-rise in the suburbs.

“I know several friends who have also made similar moves or are planning to move out once their leases expire,” he said, requesting anonymity.

Dee Pritchard, who works at the Australian International School, said that except for being more careful with the grocery shopping and giving the children fewer treats, nothing much has changed in her lifestyle.

“I’m lucky I’m not in the lower income (group) which would be suffering a lot more than I do really. But at the end of the week, the cash is less. There is less savings.”

AFP, 14 Apr 2008

SINGAPORE (AFP) – Rising food prices are driving more people in Singapore, the wealthiest economy in Southeast Asia, to join the queue for free meals, charities said Monday.

Thirty percent more people are turning up daily to fill their stomachs at the Singapore Buddhist Lodge, which serves free vegetarian meals, the temple’s president Lee Bock Guan said.

During weekends the figures are even higher, when about 5,000 people arrive for the free food compared to 3,000 three months ago, he told AFP.

“Food prices have gone up and for them, their wages have not gone up as much,” he said, adding the needy are coming from all walks of life.

“Their income is not enough to cope with the higher food prices.”

Lee said donations from some of the temple’s wealthiest members are still strong, allowing it to handle the rising demand.

The Care Corner Seniors Activity Centre, which serves free breakfast, lunch and afternoon tea, said inflation has led 10 percent more elderly citizens to turn up for meals, compared with two months ago.

Some of them have started to take more food at lunch and bring the extra home for their dinner, said a centre worker who declined to be named.

The Young Women’s Christian Association, which cooks meals and delivers them to the needy, said it is operating at peak capacity serving 200 people each day – despite a drop in rice donations.

“One of the possible reasons could be the increasing price of rice,” programme executive Han Shin Hui said, adding donations of other food items such as biscuits have increased.

She said the organisation has had to use its own funds to cover the drop in rice donations.

Singapore is an island state that imports virtually all its food needs.

Consumer price index inflation reached 6.6 percent in January-February, up from 0.8 percent in the first half of last year, the Monetary Authority of Singapore (MAS) said last week.

MAS announced it had tightened monetary policy in a bid to address the price rises.

**************

The different faces of Singapore, Seah Chiang Nee, Insight Down South, theStar, 12 Apr 2008

The top 10% of the population are the rich, who live in wealthy districts, while the bottom 20% are the languishers who have difficulty coping with a high cost structured life. The third is the large middle class.

A SINGAPOREAN couple walked into a Lamborghini showroom and bought two units – his and hers – for US$650,000 (RM2.04mil) each.

“It’s amazing; young kids coming in and spending S$2mil (RM4.7mil),” the manager told a journalist. “I don’t think they were even 30 years old.”

Last year, 29 of these crème de la crème models were sold countrywide, beating Ferrari (26 cars).

In 2007 a total of 320 luxury cars including Rolls Royce, Bentley, Lotus, Aston Martin and Maserati, were sold to Singapore’s new rich.

As the nouveau riche basks in their newfound glory, more Singaporeans from the poorer quarters are approaching the government for food aid.

A growing number of homeless can be seen sleeping in void decks of buildings and, pressed by high living costs, more elderly citizens are working as toilet cleaners or collecting used cans for recycling.

Singapore remains largely a middle class society. The high number of shopping plazas attests to it. But the group may be decreasing as a result of globalisation and runaway prices.

The city-state of 4.7 million people has two – perhaps three – faces. On the top 10% are the rich, who live in wealthy districts, own yachts and blow S$10,000 (RM23,209) on a single meal.

At the bottom 20% of the population are the languishers who have difficulties coping with a high cost structured life in an international city. The third is the large middle class.

Take the case of Carol John, 27. She doesn’t own a bed, sleeps every night on thin mattresses with her three children. Hers is a one-bedroom flat that reeks of urine smell from the common corridor outside.

“I can’t save anything, it’s so difficult for me,” John, who is unemployed, told a reporter. She relies on her husband’s S$600 (RM1,392) monthly salary and S$100 (RM232) government handout.

She is luckier than others who are homeless – elderly and even entire families – who sleep at void decks or the beach and bathe at public restrooms.

In perspective, Singapore is the second richest country in Asia next to Japan, with a per capita GDP of US$48,900 (RM154,141).

Homeless cases are few, nowhere comparable in number to Osaka’s army of vagabonds or New York’s ‘bag ladies’.

In fact, nine out of 10 poor people in Singapore have their own home, and usually a phone and a refrigerator.

But in the local context, it is a potential minefield of unrest. The proportion of Singaporeans earning less than S$1,000 (RM2,320) a month rose to 18% last year, from 16% in 2002, according to central bank data.

The bad part is that life is often worse for the unemployed – compared to other countries – because Singapore has no safety net and no rural hinterland to cushion their suffering.

Unlike in Malaysia or Thailand, a jobless person who cannot cope with the global market has no countryside to retreat to so that he can live off the land.

The problem will get worse. In other words, the rich will get richer and the poor, poorer with the middle class remaining more or less stagnant.

The state’s Gini coefficient, a measure of income inequality, has worsened from 42.5 in 1998 to 47.2 in 2006, which makes it in league with the Philippines (46.1) and Guatemala (48.3), and worse than China (44.7) according to the World Bank.

Other wealthy Asian nations such as Japan, Korea and Taiwan have more European-style Ginis of 24.9, 31.6 and 32.6 respectively.

This is one of the worst failures of the modern People’s Action Party, despite its ‘democratic socialism’ principles.

It was with these that its first generation leaders were able to turn a poor squalid society into a middle class success story.

Economists attribute the major blame to globalisation, which benefits the skilled citizens and the rich but makes it hard for the unskilled, the aged and the sick.

Even the highly educated are not spared.

The use of new instruments like company restructuring, relocation or out-sourcing of workers – unheard of before – is widening the gap and creating more income inequality.

For example, while the proportion of lower income rises, those who earn S$8,000 (RM18,570) or more increased from 4.7% to 6%.

This rising inequality could eventually undermine the bedrock of society – the broad middle class.

Some economists say that the feared erosion of Japan’s middle class, first enunciated by Japanese strategist Kenichi Ohmae, may already be happening here.

His country was emerging into a “M-shape” class distribution, in which a very few middle class people may climb up the ladder into the upper class, while the others gradually sank to the lower classes.

These people suffered a deterioration in living standard, faced the threat of unemployment, or their average salary was dropping, he said.

Gradually, they can only live a way the lower classes live: e.g. take buses instead of driving their own car, cut their budget for meals instead of dining at better restaurants, spend less in consumer goods.

And, Kenichi said, all this might take place while the economy enjoyed remarkable growth and overall wages rose.

However, the wealth increase may concentrate in the pockets of the very few rich people in the society.

The masses cannot benefit from the growth, and their living standard goes into decline.

The Singapore government, which relies on the middle class vote to remain in power, has vowed to make economic gap-levelling its top priority – for survival, even if nothing else.

by Richard Wray, The Guardian, 22 Mar 2008

· Investments in banking stock rapidly go sour
· Singapore group pours £9bn into leaking coffers

The financial crisis enveloping the world banking sector has left the sovereign wealth funds, controlled by governments from Singapore and China to Abu Dhabi and Kuwait, nursing multibillion-dollar losses after helping to bail out major western banks.

In recent months, banks including Citigroup, Morgan Stanley and UBS have turned to investment funds, including the Government of Singapore Investment Corp (GIC), its sister fund, Temasek, and China Investment Corp, for funding that western investors were unwilling to give as stockmarkets plunged.

But the dramatic fire sale of the US investment bank Bear Stearns and subsequent stockmarket run on HBOS this week have depressed banking stocks further and deepened the climate of fear in the world’s stockmarkets.

Singapore’s GIC, for example, which with funds of more than $330bn (£166bn) is one of the world’s largest sovereign wealth funds, spent more than £5.5bn on a 9% stake in UBS last year. Shares in the Swiss bank are down 46% so far this year. It spent a further $6.88bn in January as part of a $14.5bn funding round for the embattled US bank Citigroup,

Two months before, the Abu Dhabi Investment Authority (ADIA), which with assets estimated at up to $900bn is reckoned to be the world’s largest sovereign wealth fund, invested $7.5bn in Citigroup bonds that will convert to shares in 2010 and 2011 at prices from $31 to $37.

But since then Citigroup has become one of the most high-profile casualties of the sub-prime mortgage crisis in the US, and its share price has plunged as low as $20 – nearly 40% lower than when the ADIA made its investment.

The pain shows no sign of letting up. Two months ago, Citigroup announced it had plunged into the red over the past three months of 2007 and sliced its dividend almost in half as it wiped more than $18bn off the value of its assets because of exposure to sub-prime mortgages. But Wall Street analysts reckon the firm could record a further $15bn write-down for this financial quarter.

China Investment Corporation’s investment in Morgan Stanley, made just before Christmas, is also facing a significant loss. The securities it picked up for $5bn will convert to stock at $48 to $57 a share in two years’ time. At present, however, Morgan Stanley’s share price is closer to $42.

Another Beijing-backed money manager, China Development Bank, has also suffered as the stake in Barclays it bought in July has plunged in value. When it acquired the 3.1% shareholding, the bank’s shares were trading at about 680p each. On Thursday, they were at 429p.

The Singaporean fund Temasek is also nursing losses on the 2.1% Barclays stake it bought last year, although its investment in the London-listed bank Standard Chartered has fared better. The bank, which has little involvement in the US sub-prime crisis, has weathered the storm better than many of its peers.

The losses sustained by sovereign wealth funds are relatively insignificant when compared with the $3.2tr they are believed to have at their control. Morgan Stanley reckons that with the price of commodities such as oil set to remain high, this amount will balloon to $12tr by 2015. But the losses may dampen their appetite for further involvement in bailing out western banks.

Western politicians are increasingly concerned about the power of sovereign wealth funds in their markets. Earlier this week the US government agreed voluntary principles with ADIA and Singapore’s GIC to regulate their investments.

By David Lawder

WASHINGTON (Reuters) – The Bush administration, tightening pressure on Myanmar over human rights abuses, on Monday announced more economic sanctions against businesses and individuals linked to the country’s military leaders.

The U.S. Treasury Department said it was banning Americans from doing business with Asia World Co Ltd, a Myanmar company controlled by Steven Law and his father, Lo Hsing Han, who it said was a big figure in the international heroin trade.

The Treasury described both men as “financial operatives” of the Myanmar regime.

It was the fourth set of sanctions under an executive order issued last year in response to Myanmar’s military crackdown against protesters and included a freeze on any assets the firms and individuals may have under U.S. jurisdiction.

Myanmar’s junta in September crushed the biggest pro-democracy protests in nearly 20 years, killing at least 20 people, according to Human Rights Watch. Western governments say the toll may be much higher.

“The situation in Burma remains deplorable,” U.S. President George W. Bush said in a statement, and called for concerted international pressure on Myanmar to achieve a “genuine transition to democracy.”

“The regime has rejected calls from its own people and the international community to begin a genuine dialogue with the opposition and ethnic minority groups. Arrests and secret trials of peaceful political activists continue,” Bush said.

The Treasury said Law and his father, Lo, had a history of illicit activities that supported the Myanmar junta. It called Lo as the “Godfather of Heroin” who has been one of the world’s top traffickers of the drug since the early 1970s.

In 1992, Lo founded Asia World Co Ltd. a company that has received numerous lucrative government concessions, including construction of ports, highways and government facilities, the Treasury said.

Law now serves as managing director of the company, and the sanctions were extended to his wife, Cecelia Ng. The Treasury also blacklisted 10 Singapore-based companies owned by Ng, including property firm Golden Aaron Pte Ltd.

The Treasury designated two hotel chains owned by Myanmar tycoon Tay Za, who was blacklisted in an earlier round of financial sanctions, the Aureum Palace Hotels and Resorts and Myanmar Treasure Resorts

The sanctions have drawn a less than enthusiastic public reaction from Myanmar’s southeast Asian neighbors, including Singapore, a key financial center in the region. Impoverished Laos and Cambodia have denounced the U.S. moves.

Nonetheless, Adam Szubin director of the Treasury’s Office of Foreign Assets control, said some governments in the region were quietly cooperating.

“It’s incumbent on financial institutions and governments to take steps to keep dirty money out of their banks and their financial systems. We see indeed financial institutions and governments taking those steps, sometimes not in the public view,” Szubin told reporters.

(Reporting by David Lawder; Editing by David Storey)

$$$$$$$$$$$$$$$

Read the 1998 report titled The Burma-Singapore Axis: Globalizing the Heroin Trade

The Truth About Sovereign Wealth Funds by Anders Aslund, Foreign Policy, Dec 2007

Worried about oil-rich foreigners taking over your economy? You shouldn’t be. In reality, it is citizens of unaccountable, paternalistic regimes who stand to lose most when rulers play games with their national wealth.

The Arabs, the Chinese, and the Russians are about to buy up large swathes of Western economies. Or so the scare story goes. A frenzy of recent activity, including Dubai’s purchase of an undisclosed amount of Sony shares, Abu Dhabi’s acquisition of $7.5 billion worth of Citigroup, and China’s $3 billion stake in private-equity firm Blackstone, has many commentators fretting about so-called “sovereign wealth funds”—investment entities set up by governments to manage their surplus savings. According to an estimate by Morgan Stanley, sovereign wealth funds have poured some $37 billion since April into (mostly Western) financial institutions. One hyperventilating observer of these developments even bemoaned the onset of a “sharecropper economy” in the United States.

In truth, such funds are nothing for Americans or Europeans to fear. If anyone should worry about them, it’s the people whose governments are amassing them. That’s because governments tend to be terrible at managing money that is best left in the hands of private citizens. And locking away billions of dollars in wealth can have pernicious economic side effects. Maybe that’s why sovereign wealth funds are popular with dictators and semi-authoritarian regimes, which don’t have to answer for the consequences when they make poor economic gambles.

Sovereign wealth funds are nothing new, but they are growing larger. They emerged in the 1970s in oil-producing emirates, such as Kuwait and Abu Dhabi, as a way to accumulate current account and budget surpluses during the oil boom. Now, Abu Dhabi boasts the largest fund, sized at $600-700 billion, and other countries have followed its lead. Norway established a fund for its excess oil incomes in 1990. Singapore has accumulated two large funds that, unusually, are not based on oil income. And more recently, China and Russia have instituted large sovereign wealth funds of their own. Today, such funds hold as much as $2.5 trillion in assets, according to Ted Truman, a senior fellow at the Peterson Institute for International Economics. Some economists forecast they will grow to $12 trillion by 2015, an amount that roughly corresponds to the size of the entire U.S. economy.

The motives of the funds vary, and they don’t always make sense. Consider Abu Dhabi and Kuwait, which wanted to save their oil endowment for future generations, an admirable goal. But today these two bureaucratized emirates look like poor cousins in comparison with freewheeling Dubai, which has much less oil. Because the rulers of Abu Dhabi and Kuwait centralized their nations’ wealth in the hands of the state, their state sectors stifled their economies. Abu Dhabi’s fund may be impressive, but the entrepreneurial emir of Dubai has done a far better job of putting sustainable wealth in the hands of his citizens.

Another motive for the rise of sovereign wealth funds is to form a buffer against volatile commodity prices. In the 1970s, major oil exporters adjusted their expenditures to their enlarged oil revenues, but after 1980 the international oil prices plummeted, landing them in crisis. Learning this lesson, oil producers such as Russia have established “stabilization funds.” It may sound like a good idea, but the Russian deputy minister of finance responsible for foreign assets has just been arrested and accused of embezzling $43 million. Why trust the state with your money if the risk of theft is excessive?

A separate but related trend is the enormous currency reserves that Russia and especially China are amassing thanks to persistent large current-account surpluses. After the Asian and Russian financial crises of 1997-98, these governments realized that they could not rely upon the International Monetary Fund (IMF) to bail them out but needed sufficient reserves of their own. These reserves have since reached $450 billion in Russia and $1.44 trillion in China, corresponding to one third of Russia’s GDP and half of China’s.

But the low returns on international reserves make this arrangement costly. It is much more economical to reinforce the multilateral financial regime led by the IMF. Ballooning reserves, moreover, are a result of undervalued exchange rates, which are only tenable in the medium term. In the long run, inflation will eat up the competitive advantage. By purchasing foreign currencies and issuing domestic currency, central banks are boosting the money supply and inflation, which is becoming a major concern in China and Russia. Both countries would be better off letting their exchange rates appreciate to reduce inflation, which would slow their accumulation of reserves.

In short, sovereign wealth funds are often a lousy bargain for the countries that have them. That may explain why they have been developed mostly by authoritarian regimes in semi-developed countries, where citizens don’t have a chance to demand smarter economic policies. Take Singapore, whose economy depends on trade rather than a declining resource such as oil, and yet has locked up billions of dollars of its wealth in a fund since 1960. The government there has exceptionally managed to maintain its authoritarianism after the country became wealthy, but authoritarian regimes are more vulnerable to economic downturns than democratic systems. Singapore’s autocratic rulers need a reserve to pay off dissatisfied subjects to maintain power when economic times get tough.

In democracies, the politics work differently. The only democratic country with a large sovereign wealth fund is Norway. Since the Norwegian fund was established in 1990, every incumbent government has lost elections because the opposition has promised all kinds of popular expenditures from the abundant fund. Democratically, it is difficult to defend an excessive public reserve fund.

Certain international reserves are always needed, and exporters of commodities with highly fluctuating prices require larger reserves as a safety net. However, sovereign wealth funds are something different. They reflect a paternalistic—and economically illiterate—notion that the ruler knows best while citizens are so irresponsible that they cannot be entrusted with their own savings. It would be more economical and democratic to cut taxes and let citizens save and invest themselves.

Editor’s Note: The original version of this article characterized Singapore’s rulers as “unelected.” Technically speaking, they are elected, but neither freely nor fairly. Freedom House rates Singapore as only “partly free.”

$$$$$$$$$$$$$$$$$$$

UBS subprime losses mount, bank deep in red by Thomas Atkins, Reuters, 30 Jan 2008

ZURICH (Reuters) – Subprime-related problems at UBS AG mounted on Wednesday as the Swiss bank unveiled $4 billion in new write-downs in a surprise statement and sank deep into the red for the year.

The latest disclosure lifted the bank’s total write-downs from the subprime debacle to $18.4 billion and will likely increase pressure on chairman Marcel Ospel, at the UBS helm during its push into risky U.S. investments, to resign.

UBS, world banking’s leading wealth manager, posted a 12.5 billion Swiss franc ($11.45 billion) loss for the last three months of 2007 and a full-year loss of 4.4 billion francs, a grim closure to its worst performance in history.

UBS shares fell 1.7 percent in early trading as analysts puzzled over the new losses, but later pared most losses.

“One could become very emotional about UBS — continuously behind the curve in write-downs and hence always topping-up, exposure disclosure is poor to new write-downs, and management leadership vacuum,” said analysts at investment bank J.P.Morgan.

“This is certainly not good,” said analyst Georg Kanders at bank WestLB. “I had expected less.”

UBS is one of the hardest-hit banks worldwide from the credit crisis that has caused around $130 billion in losses, mangled balance sheets and forced some of the proudest institutions like UBS, Citigroup and Merrill Lynch into emergency capital-raising measures.

The surprise announcement adds to the sense of chaos in Western banking after Societe Generale last week shocked with a $7 billion loss it blamed on a lone trader — the worst trading loss in history by far.

UBS last month announced a 13 billion franc capital injection from Singapore and an unidentified Middle East investor and hopes to convince shareholders to approve the plan at an extraordinary meeting on February 27.

Resistance Mounting

But shareholder resistance to the capital increase is growing, with shareholder groups Actares, Profond and Ethos plus several pension funds urging others to oppose the move.

UBS is now struggling to restructure its investment bank and repair its credibility after the staggering losses, which have pushed its shares 40 percent lower over the past year.

UBS said in a statement the results reflect $12 billion in losses from the U.S. subprime market, plus $2 billion in losses from other U.S. residential mortgages and that weak trading income dragged performance lower as well.

UBS had been scheduled to report results on February 14.

The group said it managed to reduced its balance sheet and risk weighted assets during the quarter, which resulted in a loss, and that it will report a BIS Tier 1 ratio — a measure of capital safety — of 8.8 percent as of December 31.

The Swiss bank’s huge losses, which have prompted calls for it to spin off its investment banking business and concentrate on its highly successful wealth management activities, stem from a disastrous hedge fund venture into subprime mortgages.

In a sign that the subprime disaster may drag out for some time, the FBI this week said it is investigating 14 corporations over possible accounting fraud and insider trading violations in a crackdown on subprime lending. The companies were not named.

Switzerland’s banking regulator said last month it would probe major subprime losses at UBS while Merrill Lynch disclosed in November that the SEC was investigating matters related to its subprime business.

(Reporting by Thomas Atkins; Editing by David Cowell and Jason Neely)

Normally, the economic well being of a nation is measured by its Gross Domestic Product (GDP). GDP assumes that if there were more goods in circulation, general welfare would automatically follow. At a conference in Cleveland, a recent survey of citizen’s perceptions of well being across countries by Gallop, surprisingly, revealed that Singapore, which is the richest country in Asia, after Japan, and one of the most efficient and least corrupt societies in the world, scores the lowest in the Well-being Index. Surprisingly, people in Singapore are less satisfied with their lives than much poorer and less efficient countries. Evidently, according to the survey, to be respected as a free human being and to have the freedom to make personal choices– parameters on which Singaporeans give their society a low score–contribute much more to people’s feelings of well being than economics – click here for full article

Stiglitz says GDP may be poor indicator of economy, AFP, 8 Jan 2007

WASHINGTON (AFP) – Joseph Stiglitz, the Nobel laureate economist tapped to head a new French study, said Tuesday he sees gross domestic product (GDP), the most often cited yardstick, as an imperfect indicator.

Stiglitz, named by French President Nicolas Sarkozy to head a panel to find a new method of economic calculation that will include quality-of-life factors, said the current yardsticks “only reward governments if they increase materialistic production.”

“If you improve the quality of life, but it doesn’t show up in more material consumption, it doesn’t show up in GDP, and you’ll be criticized,” the US economist told AFP in a phone interview.

Sarkozy earlier announced in Paris that Stiglitz and a fellow Nobel economics laureate, Amartya Sen of India, will participate in the project.

The 64-year-old winner of the Nobel economics prize in 2001 and currently a professor at Columbia University in New York, is to chair the panel.

Stiglitz, known for his outspokenness and criticism of globalization, said the French president had given him “a broad-ranging mandate trying to put together a commission study on the broad questions of how do you measure well-being.”

“Among the economics profession there has been a strong sense for a long while that gross domestic product is not a good measure. It doesn’t measure changes in well-being, it doesn’t measure comparisons of well-being across countries,” he said.

Thus, if political leaders “are trying to maximize GDP and GDP is not a good measure, you are maximizing the wrong thing and it can be counterproductive,” he said.

The former chief economist at the World Bank, who resigned in 1999 after accusing rich countries of not doing enough to help the poor, said he hoped the panel’s findings would go beyond the French framework.

“Hopefully this will have global consequence,” he said.

“It doesn’t necessarily mean that there will be a replacement of current measures, but maybe a construction of complementary measures,” he said.

He said there was some discussion about the possible participation of other countries in the project.

“Whether we will do it just under the auspices of the French government or whether there will be other partners is a question that is still open,” he said.

For him, measuring growth is a global issue made even more urgent by the problems caused by global warming.

“The standard measures of GDP do not measure the degradation of the environment, the depreciation of natural resources.”

And GDP growth can mask a sharp decline in individuals’ quality of life, he argued.

“It’s been particularly true in the US where GDP has been going up but actually most people not only feel worse off, their measure of income is actually going down,” he said.

Stiglitz said he had agreed to take on the project only after the French government assured him the new panel “will have complete liberty” to define the problem and to analyze it.

“I think that on all sides of the political spectrum there is a recognition of these deficiencies, and a recognition that it is important that we develop better metrics, no matter whether you are on the left or the right.”

Stiglitz said he had spoken with Sen, who would be a member of the panel and an adviser. Sen won the Nobel economics prize in 1998 for work on developing economies and on well-being in India.

Stiglitz said the timeframe for the project had not yet been determined, but he was aiming for a result in the “medium term,” or within the next 18-24 months.

by Melanie Lee, 9 Nov 2007

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.”

($1=1.448 Singapore Dollar), ($1=.6894 Euro)

(Editing by Geert De Clercq and Jacqueline Wong)

by John Burton in Singapore and Amy Kazmin in Bangkok, Financial Times, 11 Nov 2007

With Burma’s state-controlled banking system crippled by stifling regulations, Burmese business people – and others with access to hard currency – have for years looked to Singaporean banks to hold their assets.

Singapore has a much more developed financial services sector than other south-east Asian countries.

The city-state, as an international finance centre, is relatively open to deposits from overseas, and its banks have an enviable reputation for service and efficiency. “Leading entrepreneurs in Burma regard Singapore as their refuge from the chaos of Burma’s monetary and financial system,” says Sean Turnell, a professor at Australia’s Macquarie University and Burma specialist.

But as the US leads efforts to increase the financial pressure on Burma’s ruling military junta and its supporters, that practice has put Singapore in an uncomfortable spotlight.

Visiting the region last week, a senior US official called on Singapore and its south-east Asian neighbours to crack down on Burmese funds parked in their banks.

“We believe that there are [Burmese] regime officials with accounts in Singapore and other countries and we hope that governments will ensure that their financial institutions are not being used as sanctuary,” said Kristen Silverberg, the assistant secretary of state in charge of co-ordinating US diplomatic policy with the UN and other international organisations.

The statement was one of the most explicit the US has made about the possible role of Singapore, its closest ally in south-east Asia, in sheltering the assets of Burma’s military leadership.

Bank secrecy laws prevent the Monetary Authority of Singapore from commenting on whether Burmese officials have accounts in the city-state, but it has said that any suggestion that junta leaders may be using it as a “financial haven” are “completely baseless”.

It says it acts strictly against money-laundering of illicit funds, such as earnings from “criminal conduct”, and funds linked to terrorist groups or regimes targeted by UN sanctions – which Burma has not been.

But Prof Turnell says the source of the generals’ money – if not actually illegal according to Singaporean law – is still of questionable legitimacy. For years Burma’s generals have been accused by opposition groups of exploiting a monopoly on profits from Burma’s extensive natural resources.

“If anyone looks at any of the entrepreneurs, or any business in Burma that makes any money at all, it makes money in rent-seeking on the state in various forms,” Prof Turnell says. “Thus, one might regard any of the money of the regime as somewhat ill-gotten”.

The US request for Singapore to restrict its banking ties with Burma comes as Singapore promotes itself as a regional offshore banking centre with some of the world’s strictest bank secrecy laws.

Singapore has quietly co-operated with the US previously on similar issues. When the US imposed tougher financial sanctions on North Korea in 2005, funds deposited by the Pyongyang government in Singapore were removed under US pressure, according to an intelligence official with knowledge of the issue.

Rangoon-based diplomats say the example of US financial pressure against North Korea has rattled the junta, already shaken by recent financial sanctions imposed by the US and Australia.

Banks in Singapore are required to identify “politically exposed persons”, defined as senior officials from foreign governments, who might deposit funds in the city-state, according to MAS guidelines.

Singapore, which currently chairs the Association of South-East Asian Nations and is host of next week’s annual gathering of the group, has argued that formal economic sanctions could backfire on efforts to push the military junta into talks with the democratic opposition, though George Yeo, the foreign minister, has promised the city-state would comply with any UN-mandated sanctions.

Irrespective of government policy, Prof Turnell says Singaporean banks may be quietly re-evaluating or cutting their ties with Burmese elites.

“They are extremely jealous of their squeaky clean image – and the idea that they uphold more internationally accepted norms than other places,” he says. “This has the potential to embarrass Singapore and tarnish that competitive edge.”

Reuters, 6 Nov 2007

BANGKOK, Nov 5 – The United States told Singapore and its banks on Monday to sever financial links with Myanmar’s junta, widely believed to use the city-state as its main off-shore banking centre.

“We believe that there are regime officials with accounts in Singapore,” senior State Department official Kristen Silverberg told reporters in Thailand during a regional tour to drum up support for a tougher Asian stance against the former Burma. “We hope that they ensure that their financial institutions are not being used as sanctuary for Burmese officials,” said Silverberg, who is responsible for U.S. liaison with groups such as the Association of South East Asian nations .

ASEAN is one of the few international organisations to admit Myanmar but its current chairman – Singapore – expressed “revulsion” at September’s crackdown on monk-led democracy protests in which at least 10 people were killed.

Washington wants Singapore to go one step further and take action in the form of, say, financial sanctions or travel restrictions on members of the regime and their cronies, as the United States and Australia did last month.

Silverberg did not say whether “third party” sanctions, targeting non-U.S. businesses that do business with Myanmar, were among further measures being considered in Washington if the generals fail to embark on an acceptable path to democracy.

“Obviously, we’ve asked financial institutions and governments worldwide to consider whether their relationships with Burma are helping to facilitate this regime,” she said.

“We’re glad that both governments and private institutions are taking that request seriously.”

Singapore officials have publicly opposed sanctions, but in the last few weeks, its banks appear to have been quietly distancing themselves from Myanmar, analysts and bankers say.

The most concrete example is Air Bagan, a small airline owned by Htoo Trading, a conglomerate which recently appeared on a U.S. blacklist on account of its links to the junta, which is suspending flights to Singapore.

The city state’s Today newspaper said the final straw for the airline, which was struggling with declining passenger numbers after the crackdown, was Singapore banks deciding to “stop dealing with” it.

Despite Washington’s assertion that Myanmar’s generals park their cash in banks in Singapore – also their favoured destination for shopping and medical treatment – Prime Minister Lee Hsien Loong insists the financial system is clean.

“We don’t play dirty money. We don’t condone money-laundering,” he told CNN.

The Burma Campaign UK, a London-based activist group, list 10 Singapore firms on its “Dirty List” of those with links to Myanmar, including banks DBS Group Holdings , Oversea-Chinese Bangking Corp and United Overseas Bank , and conglomerate Keppel Corp.

Gated Gardens: Singapore has basically two kinds of real estate—luxury, or state-run
By Sonia Kolesnikov-Jessop | NEWSWEEK
Nov 12, 2007 Issue

Located just 10 minutes from Singapore’s bustling docks, Sentosa Cove is a world apart. The road leading into the city’s super-posh residential complex runs past a championship golf course framed in tropical jungle. Four years ago much of the reclaimed land was barren; today a 117-hectare gated community with homes more than $10 million apiece has risen to become one the most select addresses in Asia, replete with waterfront boardwalks, meticulous landscaping and a yacht club. “These people who buy here have a choice to live anywhere in the world,” says Jennie Chua, chairman of Sentosa Cove Pte Ltd, “so it’s heartening that they’ve chosen to buy a home here.”

Singapore has long been a magnet for expatriates. It’s an ideal gateway for business people who travel regionally but want their families to enjoy a clean environment and First World amenities, including top international schools and state-of-the-art hospitals. The city’s emergence as a vital Asian financial hub has added to the lure in recent years, attracting hordes of well-heeled bankers and fund managers. Government policies have moved toward recasting the port city, with a population of 4.5 million, previously known for its buttoned-down uniformity as the Monaco of the East. To that end, two new casino resorts are under construction, and the city will stage its debut Formula One Grand Prix next year.

So what’s the problem? Admission to the “Singaporean Good Life” doesn’t come cheap. Singapore, perhaps more than any other expat hub, has a two-tier housing system. While 1 percent of the population lives in high-end luxury homes, like those at Sentosa Cove, 84 percent of the rest live in public housing as private spaces become more unaffordable.

“Public housing in Singapore is just not for the low-income. It’s for the middle-income and even the upper-middle-income,” says Mah Bow Tan, Singapore’s minister for National Development.

The situation won’t get better any time soon. Increasingly, the city’s competitiveness hinges on the arrival of ever more foreign professionals. Some 30 percent of its population today are foreigners, compared with just 14 percent in 1990. Singapore’s declining birthrate means this ratio will increase further. A bifurcated city is taking shape. On one side: a vibrant metropolis with tree-lined shopping arcades, fashionable bars and restaurants, gourmet grocers, art galleries and lavish condominiums. On the other: a public-housing heartland of small flats where most of the population resides, generally content, but without any real hope of escape as the price gap between private and public housing keeps widening.

Singapore’s public housing was conceived of shortly after independence as a means to elevate poor Singaporeans from slums. Households could purchase or rent subsidized flats, often with government loans, in developments that rank among the best-managed facilities of their kind in the world. Buildings are usually well maintained. Strict integration policies also prevent them from becoming ethnic enclaves, as did housing projects in France or the United States, for example. Indeed, they were a critical component in the government’s campaign to engineer a multi-racial society from a population consisting of Chinese, Malay and Indian immigrants.

Until recent years, the plan was to shrink the city-owned share of the housing stock over time, as owners who grew more prosperous sold their starter flats and moved into more-luxurious private digs, and fewer first-time buyers required subsidized housing. Now it looks like Singapore’s rising international stature and popularity among expatriates could undermine that plan. Exploding home prices recently forced the Housing Ministry to raise the maximum grant for first-time buyers by 50 percent and relax the qualifying criteria for lower-income households. “This is quite a significant shift from several years back, when the government indicated that the role of [the Housing and Development Board] may be down-sized,” says Chua Hak Chin, economist at Citigroup.

Efforts are also underway to spruce up the facilities. Recent designs look more like private housing; the architecture has become less utilitarian and more environmentally aware. One planned development even has a beach and a boat dock. Still, while such schemes might tamp down resentment felt toward the select few who can afford the gated-access lifestyle on display at Sentosa Cove, they don’t change the fact that in Singapore, one of the richest places in Asia, even the middle class are now risking getting off the private-property ladder.

$$$$$$$$$$$$$$$$

Rapid growth at a high price by Seah Chiang Nee, Insight Down South, 3 Nov 2007

Singapore’s fast growth is beginning to be expensive. Increasing prices in just about everything has overshadowed the city state’s prosperity in the last four years.

THE city-state has been hit by an unceasing bout of price increases that has overshadowed the city’s prosperity in the past four years.

The latest series of price hikes came recently almost days within each other on household necessities like bread, noodle and live chicken (by an average of 20%) – and bus fares by one or two cents.

(This came only a year after fares of buses and trains were raised by one to three cents.)

Hardly had the public time to ponder the impact when the government dropped another bombshell. It substantially raised the Electronic Road Pricing (ERP) rates for the third time this year.

This will hit the pockets of some 800,000 car-owners, not to mention buses and lorries.

Under the system, they are charged electronically every time they use certain stretches of roads and highways during busy hours, according to places and times.

The peak charges will go up on Monday by $1.50 to $5.00 – or 43% at the worst point. Others are slightly cheaper.

Incredibly this is the third time in 2007 that ERP rates are raised, and the public protests have been uncomplimentary and loud.

Inflation is at its worst here in 12 years and has become the people’s biggest worry today. For many, the high costs are blurring the Singapore Dream.

Worst affected is the broad middle class, which is already paying dearly for the high oil price and a punishing five-to-seven per cent rise in the Goods and Services Tax (GST).

Since the beginning of the year, a wide range of products and services – including housing, hospital and medical care, education, electricity – has been skyrocketing.

Hardly a week passes without an announcement or two of some price or government fee going up.

There are two immediate effects. The value of money is dropping by the week, and savings are discouraged since consumer prices are rising faster than interest the banks pay on deposits

Some other recent price hikes:

> Electricity. Costs up by 4% between October and December. In the last quarter, they had been increased by 9%.

> Fees in certain schools up 10%-12%; university fees had been raised earlier. One special needs school doubled its fee.

> Average hospital bills were up by 10% to 30% with subsidised class C wards chalking up the highest percentage increase. Polyclinic charges were also raised.

> Cigarette prices went up by some 40 cents a 20-package to S$11.60, or 3.6%.

There were hikes on cable TV, car insurance, car parking and postal charges, as well as goods from milk to Milo, cooking oil to coffee, canned foods, processed foods, wheat products – and many other items at supermarkets.

The government appears unable to take action to stop the epidemic, a contrast to the first-generation government during such crises.

It launched NTUC Fairprice in 1973, a workers cooperative, to stem out profiteering on rice and other necessities.

And ministers and parliamentarians at the time would move around marketplaces and shops, appealing to shopkeepers to be sensitive to people’s financial needs.

Like previous inflationary times, this one is largely imported, the result of higher oil and other imported products.

The second cause is a robust Singapore economy, which has been growing at an average of 7.6% a year since 2004. This year 8% is expected. It creates demand.

Business has been relatively strong, salaries have risen (civil servants just got a 6% pay hike) and unemployment is the lowest in 10 years.

But so strong and persistent is inflation that many Singaporeans feel they are the poorer for it.

Part of the cause is the government, whose priorities are economic growth and asset accumulation (for foreign investments) – even at the expense of a higher cost of living.

To that end, it has increased GST from five to seven per cent and may eventually reach 10 per cent. Fees for public services are being raised to ensure no drop in Treasury collection.

Deficit budget, although not entirely unknown in Singapore, is a very rare happening.

Many young professionals who just start off in life are worried that the sharp run-up in property prices (a boon for 85% homeowners) has made it virtually impossible for them to buy a flat.

Some are putting off marriage or raising children.

The people see high prices as being here to stay – a new feature of life in a fast over-crowding city that wants to see a population of seven million.

Mr Lee Kuan Yew has said that Singapore is not only a developed country, but occupies ‘the top half’ of the First World.

Keeping it there not only brings wealth but also a new painful structure of expensive living comparable to the likes of Paris and Tokyo.

Understandably inflation has become a hot debate subject.

Blogger ‘Raul77’ points out that Singapore has neither land-size nor natural resources, so “it can either be a 1st World country or a poor one. No third way about it.”

As a result, life is always stressful, and those who can’t take it are leaving for quieter, bigger countries.

This is tough for the middle class and working class, which are just struggling for a living amidst the perceived wealth, unhappy and with few choices in life.

To which Nornan Lee replies: “If Singapore is not worth living, then nowhere is worth living.”

by Bertil Lintner, Asia Times Online, 2 Nov 2007

BANGKOK – For Htet Tay Za, a 19-year-old member of Myanmar’s elite who attends an exclusive and expensive international school in Singapore, life is often a party. A picture recently obtained by the Chiang Mai-based publication The Irrawaddy shows the young man being kissed on the cheek by a bikini clad Caucasian woman.In another portrait, the partying youngster is seen in festive mood beside a male friend puffing on a water pipe. {Pseudonymity: Tay Za’s Son Ridicules US Sanctions}

But the party may be over soon for Htet Tay Za, as his father who pays the bills for his lavish lifestyle, Tay Za, figures prominently in an October 19 executive order from the US Treasury Department that aims to block his assets and make it illegal for US citizens to have any business dealings with him and his private companies.

Earlier US sanctions, first imposed in 1997 and increased following an attack on pro-democracy leader Aung San Suu Kyi and her followers in May 2003, were often criticized because they broadly banned all new investment into and imports from Myanmar. The latter measures forced textile factories to close down or to move across the border to Thailand. Thousands of workers lost their jobs, while the economic impact on members of the ruling junta was minimal.

This time, however, the US has imposed what it is referring to as “smart sanctions” that target specific individuals and companies. The punitive tactic is similar to the one the US applied in September 2005 against Banco Delta Asia in Macau, which the Treasury Department referred to in a statement at the time as “a willing pawn for the North Korean government to engage in corrupt financial activities”.

The move froze US$24 million in assets belonging to companies controlled by the North Korean government and as a result the entire bank almost collapsed. In the end, the money was released and moved to a bank in Russia. But it forced the North Korean government back to the negotiating table to resume the then stalled six-nation talks on Pyongyang’s controversial nuclear program.

The recent action against the Myanmar government and corporate entities still may not force the junta to embark on a serious dialogue with the country’s hobbled pro-democracy movement. Unlike previous US sanctions, however, this time they will certainly hurt the ruling generals and their business cronies more than ordinary Myanmar workers and citizens.

Tay Za is the 42-year-old manager of the Myanmar-based Htoo Trading Company, which among other subsidiaries controls the Singapore-registered Htoo Wood Products, Pavo Trading, and Air Bagan. Through the new sanctions, all of those companies are now blacklisted by the US government. The businessman is known to be very close to junta leader General Than Shwe and when he first launched into business he made a point of employing the children of powerful generals – which presumably paved the way for him to land lucrative government contracts.

Among those currently or formerly on his payroll are Aung Thet Mann, the son of General Shwe Mann, the junta’s third ranking official after Than Shwe and army chief General Maung Aye. According to a 2005 report in The Irrawaddy, Tay Za is also close to Than Shwe’s son, Kyaing San Shwe, whom Tay Za presented with a US-made Hummer, for undisclosed reasons.

Htoo Trading, which is engaged in timber exports, property development, palm oil production, arms deals and aviation, was one of two construction companies granted lucrative contracts to build the new national capital at Naypyidaw, to which the government moved from Yangon in November 2005. Also included on the new US sanctions list is Tay Za’s wife, Thidar Zaw, and another son, Pye Phyo Za, who spends most of his time in a luxury apartment in Singapore.

Junta who’s who

The US Treasury Department’s two new lists, one of which mentions by name 14 generals and government ministers, and the second an additional 11, are all now barred from entering the US and will have any assets they may hold in US financial institutions frozen. Those measures may be mainly symbolic, as few if any of the military officials have assets held in US banks or were likely planning to spend their next holiday in Hawaii or Florida.

But there are other important businessmen affiliated with the junta who could be adversely affected. The US sanction list notably includes Khin Shwe, president of Zaygabar and one of Myanmar’s leading real estate moguls, and Htay Myint, chief executive officer of the Yuzana Company, a large property developer.

Khin Shwe first attracted international attention in 1997 when he hired a US public relations firm, Bain and Associates Inc, in what turned out to be a futile attempt to improve the junta’s image and standing in Washington. Bain and Associates now appears to have washed its hands of Myanmar’s junta. The firm’s homepage, perhaps for good reason, omits Zaygabar among its list of “clients with whom we’ve worked”.

In Yangon, Zaygabar owns industrial parks, a golf and country club frequented by army officers, a hotel and the city’s tallest residential condominium. The fact that Khin Shwe’s daughter, Zay Zin Latt, is married to another of General Shwe Mann’s sons, Toe Naing Mann, some analysts believe may have helped him secure lucrative government contracts and concessions. Outside Myanmar, Khin Shwe is known to have business relations with companies in Japan, South Korea and Thailand. He is currently chairman of the Myanmar-Japan and Myanmar-Korean Friendship Associations and also chairs the Myanmar-Thai Development Corporation.

Htay Myint’s Yuzana is a somewhat smaller company, but has substantial investments in property as well as agricultural and fishery ventures. According to The Irrawaddy, he serves as president of the Construction Owners Association, the Fishing Vessel Owners Association and the Myanmar Project Association, and is the owner of one of Myanmar’s biggest supermarket chains. Htay Myint’s contacts with the junta were strongest with former prime minister Gen Khin Nyunt, who was ousted in a purge in October 2004. But the fact that Yuzana is still doing booming business in Myanmar indicates that he must have other high-level contacts as well.

Not on the US new sanctions list is Tun Myint Naing, also known as Steven Law , managing director of Asia World Company, the country’s biggest and most diversified conglomerate. Asia World was the other main contractor involved in the building of Naypyidaw.

Whether Law and his Asia World will be added to the list remains to be seen, but according to an e-mail received by Asia Times Online from the US State Department, what has been announced so far “is not meant as the final word”. Meanwhile, Asia World maintains close relations with the junta and it recently has been involved in road construction in northeastern Shan State, the renovation of Yangon’s international airport, and the construction of a deepwater port near the old capital. Law is also known to have had business interests in Singapore, including the recently dissolved Kokang Singapore Pte Ltd, and others through his wife, Cecilia Ng, who is a Singaporean citizen.

The effects of the new sanctions were felt within days of their announcement. Tay Za’s Air Bagan has cancelled its international flights to both Bangkok and Singapore and remains basically grounded . Banks in Singapore, the financial center of choice for Myanmar’s generals and junta-affiliated business tycoons, have reportedly become slow in processing any transactions to and from Myanmar.

The reason, some observers suggest, is that Singapore’s banks want to check whether any of their clients are on the US sanctions list – in which case they could face a similar situation to that of Macau’s Banco Delta Asia. Singapore is not legally obliged to uphold the new US sanctions, but its banks are evidently nervous about the adverse publicity the punitive measures could have on their global reputations. Air Bagan’s bank accounts in Singapore have already reportedly been blocked, though it’s unclear if this is a permanent or temporary intervention.

What is clear is that it will be much more difficult for Myanmar’s generals and their business associates to deposit both their legitimate and ill-gotten gains in Singaporean banks. Myanmar workers based abroad, many of whom send remittances to their relatives back home, will notably be less affected by the new measures as they tend to use informal underground banking systems such as “hawala” to avoid unfavorable exchange rates and excessive government taxes.

The new sanctions also likely mean less partying in Singapore for the generals, their cronies and siblings. And because most international bank transfers pass through either the US or Europe, whatever funds the junta already has parked in Singapore will likely need to stay there or risk being frozen or confiscated. The medium-term efficacy of the US’s smarter sanctions is more difficult to ascertain, as the junta will likely seek out new destinations for its funds. But suddenly life just got considerably harder for Myanmar’s ruling generals.

Bertil Lintner is a former correspondent with the Far Eastern Economic Review. He is currently a writer with Asia-Pacific Media Services.

by Ed Cropley, Reuters, 30 Oct 2007

BANGKOK, Oct 30 – While opposing sanctions against Myanmar in public, Singapore’s government and its banks in particular appear to be quietly distancing themselves from the ruling junta, analysts and bankers said on Tuesday.

Officially, Singapore has not deviated from the line given by Prime Minister Lee Hsien Loong a month ago, at the height of the junta’s bloody crackdown on democracy protests, that sanctions would be unlikely to shunt Myanmar towards political reform.

But gradually, signs are emerging of institutions in the city-state pulling back from involvement with the generals, for whom Singapore is a top medical and leisure destination – and widely believed to be home to their off-shore bank accounts.

“What’s going on behind the scenes, particularly on the financial side, is de facto sanctions,” said Sean Turnell, author of the Burma Economic Watch journal at Sydney’s Macquarie University.

The latest indication of that is Air Bagan, a small Myanmar airline on a U.S. government blacklist that will suspend flights to Singapore from Nov. 5, travel agents say.

Singapore’s Today newspaper said the final blow came when Singapore banks said they would “stop dealing with” the airline, owned by Htoo Trading, with close ties to the junta’s top brass.

“That would seem to be an indication that Singapore either is lining up behind the sanctions, or that they have other financial concerns or issues with Air Bagan,” said Victor Comras, architect of U.S. economic sanctions against Yugoslavia in the 1990s.

Easy Target

It is financial links to the likes of Air Bagan that have made Singapore a target for Myanmar activists and members of the U.S. Senate desperate to find a lever to use on the junta, a regime that seems to thrive on isolation.

Banking sources told Reuters that the Monetary Authority of Singapore was unlikely to ask banks to cut ties with Myanmar firms unless there were U.N. sanctions on the country.

“Without legal authority such as U.N. sanctions, it won’t be possible,” a Singapore-based banking source said.

The MAS and Singapore’s three banks, DBS Group Holdings , Oversea-Chinese Banking Corp and United Overseas Bank , declined comment.

But a second banking source said banks were taking measures on their own to restrict links with Myanmar companies on a case by case basis. “It is not a blanket ban. If a customer comes to us, we can’t turn him away,” the banker said.

Activist group Burma Campaign UK lists 10 Singapore firms on its “Dirty List” of those with involvement in Myanmar, including the three banks and conglomerate Keppel Corp. (Pseudonymity: See below for information on the 10 Singapore firms)

Foreign Minister George Yeo said on Monday Singapore would act according to international agreements.

“We are an international financial centre. Whatever policy we apply to Singapore banks, we must apply to all banks operating in Singapore,” he told reporters.

The police announced last week Singapore would step up efforts to detect money laundering from Nov. 1 by requiring anyone carrying or transferring more than $20,650 in or out to submit a report to immigration authorities.

While Washington and Brussels have tightened the screw gradually, Singapore has become one of the biggest investors in the former Burma. Its three banks all have offices there and firms have poured money into hotels and tourism.

Singapore senior statesman Lee Kuan Yew told an American columnist he rued advising hotel companies to go in. “They have sunk in millions of dollars there and now their hotels are empty,” he said. He also called the generals “rather dumb”.

(Additional reporting by Saeed Azhar in Singapore and Darren Schuettler in Bangkok)

$$$$$$$$$$$$$

Source: Burma Campaign UK Dirty List

CNA Group Ltd
CNA is as Sesdaq listed company headquartered in Singapore. It was, in 2005, awarded a contract for the expansion of Yangon International Airport. Under the contract C.N.A. will design, supply, install and commission 24 engineering systems for the airport terminals. The project is to be completed by early 2007 but the CEO has commented “we will continue to expand our presence in the region (Myanmar).”

DBS Group Holdings Ltd
DBS Group Holdings Ltd is the holding company of DBS bank and is one of the largest companies in terms of market capitalisation listed on the Singapore Exchange, with total assets amounting to over S$180 billion. Included in its international banking network is a representative office in Burma.

Ginnacle Import-Export Pte Ltd
Ginnacle is a company located in Singapore involved in the sales and marketing of Burmese teak lumber, decking and furniture. The Burmese regime owns all teak plantations in Burma and teak sales earn the regime millions of pounds every year.

Golden Aaron Pte. Ltd
Golden Aaron Pte. Ltd. is a Singaporean oil corporation. The company is part of a consortium which in 2005 signed three production sharing contracts with state run Myanmar Oil and Gas Enterprise, to explore for oil and gas in Burma, both on and offshore. It is a project which will undoubtedly provide the Burmese junta with a large and valuable source of income. The same consortium signed similar deals in 2004.

Interra Resources
Singapore listed Interra Resource’s principal activities are the exploration and operation of oil fields for the production of crude petroleum. It operates in Indonesia and Burma. In Burma its subsidiary Goldwater Oil was the first foreign oil company to extract oil in Burma. It is currently engaged in oil and gas exploration and production through its jointly controlled venture with Geopetrol called Goldpetrol.

Keppel Corporation
Singapore’s Keppel Corporation is a multinational corporation with interests in three key business areas: Offshore and Marine, Property and Infrastructure. Its property wing – Keppel Land has a presence in eight Asian countries including Burma where it owns the Sedona Hotels in Yangon and Mandalay.

Kerry Logistics Group/Kuok Group
Kerry Logistics is a goods transport logistics company with branches in 12 countries, including the UK. Kerry Logistics also operates in Burma, facilitating the export of Burmese goods. Kerry Logistics is part of the Singaporean conglomerate, Kuok Group.

OCBC Bank
OCBC Bank is Singapore’s longest established bank, and is today one of Asia’s leading financial services groups with gross assets of S$136 billion. The group has a global network of more than 310 branches and representative offices in 15 countries including Burma.

Shangri-La Hotels
Shangri-La Hotels is a Singaporean hotel company. It operates the Traders hotel in Rangoon. Aung San Suu Kyi has asked tourists not to visit Burma because it helps fund the regime and gives it legitimacy. Forced and child labour was used to develop many tourist facilities. In the UK, Shangri-La plans to operate an opulent 5 star hotel in the proposed ‘shard of glass’ tower block at London Bridge.

United Overseas Bank Group
The United Overseas Bank was founded in 1935 and is today a leading bank in Singapore and a dominant player in Asia-Pacific. As of 31 December 2005, the UOB Group had total assets of S$145.1 billion and shareholders’ equity of S$14.9 billion. UOB has a global network of branches, offices and subsidiaries, one such office being in Burma. UOB also has diversified interests and through its subsidiary United Overseas Land the group operates the Park Royal Yangon hotel.

This book is now available at Select Books. See my two earlier posts about this book: Hype & Spin: Questioning the Singapore Miracle AND Much Of The World Has Been Deluded by Singapore’s Hollow Roars Of Success

Wai Moe, The Irrawaddy, 24 Oct 2007

Money transfers between Burma and Singapore through the United Overseas Bank have been cancelled indefinitely and non-bank money transfers via agents from Thailand to Burma have been discontinued temporarily, said business sources.

A source close to Burmese businessmen in Singapore told The Irrawaddy on Wednesday that some trading companies transferring money from Burma to Singapore in the past week have not received the remittance and no reason was disclosed for the delay.

“It is unusual because previously the money transfer process was about two working days. Now it is more than a week,” he said.

He also said that he did not know whether the transfer delay was related to the US sanctions blocking certain transactions related to Burma.

After the junta’s brutal crackdown on peaceful protesters and monks, the US imposed further sanctions against the Burmese military government on September 27 and October 19—including freezing the bank accounts of 25 military officials and 12 close associates of the junta.

A UOB agent in Rangoon refused to comment when the Irrawaddy enquired about the cessation of money transfers.

According to a report by the Burma Campaign UK, 10 Singapore firms are on its “Dirty List” of companies for their business with the Burmese junta, including the Development Bank of Singapore (DBS), the United Overseas Bank (UOB), the Overseas Chinese Banking Corporation (OCBC), and conglomerate Keppel Corp.

Business sources said that among those Singaporean banks, UOB is one of the main conduits for money transfers between Burma and Singapore. It is also connected to the Myanmar Foreign Trade Bank, said the sources.

Meanwhile, private agents, or “handies,” who administer non-bank money transfers from Thailand to Burma, have ceased operations indefinitely as of last week, said sources. An agent in Bangkok told The Irrawaddy on Wednesday that they had stopped work because of the uncertain situation in Burma. The handies also halted money transfers to Burma temporarily during the mass protests in Burma in September.

But non-bank money transfers to Burma from other Asean countries, such as Singapore and Malaysia are still running as usual, said sources in the two countries.

Analysts said remittances to Burma from overseas migrant workers have dropped since the crackdown on street protesters. The reason for the drop is not the insensitivity of the migrant workers, but worries that the military regime might suddenly cancel currency notes once again.

Oversea Burmese workers have been using these handies to send money to their families for many years. Business agents, who want foreign currency, buy Burmese migrant workers’ money and their agents in Burma deliver the money to the workers’ families. This kind of cash transfer is not official and both parties operate on a basis of trust. “No one needs to pay tax this way,” said an agent.

Tens of thousands of Burmese working in Thailand, Malaysia and Singapore use informal financial “fences” to remit money home.

Two Malaysian riot police, foreground, stand guard as Myanmar activists from All Burma Democratic Force hold placards during a demonstration outside US embassy in Kuala Lumpur, Malaysia, Tuesday, Oct. 23, 2007. Some 50 Myanmar activists turned out in front of the Singapore High Commission against its trading involvements with the Myanmar military junta, and called for stronger US support while demonstrating near the US embassy. (AP Photo/Lai Seng Sin)

A Myanmar activist from All Burma Democratic Force wearing a headband is seen behind police line during a demonstration in front of the Singapore High Commission in Kuala Lumpur, Malaysia, Tuesday, Oct. 23, 2007. Some 50 Myanmar activists demonstrated in front of the Singapore High Commission against its trading involvements with the Myanmar military junta, and called for stronger U.S. support while demonstrating near the U.S. embassy. (AP Photo/Lai Seng Sin)

With a background of Malaysia’s landmark Petronas Twin Towers, a Myanmar activist from All Burma Democratic Force holds a placard as he marches through to the Singapore High Commission during a demonstration in Kuala Lumpur, Malaysia, Tuesday, Oct. 23, 2007. Some 50 Myanmar activists demonstrated in front of the Singapore High Commission against its trading involvements with the Myanmar military junta, and called for stronger U.S. support while demonstrating near the U.S. embassy. (AP Photo/Lai Seng Sin)

A Myanmar activist from All Burma Democratic Force, who wears a T-shirt with a print of Myanmar opposition leader Aung San Suu Kyi holds a placard during a demonstration outside U.S. embassy in Kuala Lumpur, Malaysia, Tuesday, Oct. 23, 2007. Some 50 Myanmar activists demonstrated in front of the Singapore High Commission against its trading involvements with the Myanmar military junta, and called for stronger U.S. support while demonstrating near the U.S. embassy. (AP Photo/Lai Seng Sin)

Myanmar nationals protest against S’pore’s business ties with junta by By Carolyn Hong, Malaysia Bureau Chief In Kuala Lumpur, 23 Oct 2007, Straits Times website

KUALA LUMPUR – About 50 Myanmar nationals demonstrated outside the Singapore High Commission here on Tuesday to demand that the Republic break its business ties with Myanmar.

Holding placards with bold red lettering and wearing red head bands, the group, who called themselves “All Burma Democratic Force”, chanted slogans like “Free Burma” under the watchful eyes of policemen.

Hundreds of curious motorists slowed down their cars on the busy road fronting the High Commission to watch them.

Their spokesman Dr Mohammad Sadek read out a memorandum claiming that Singaporean companies are among the biggest investors in Myanmar, and supporters of the country’s military junta.

He also charged that that Singapore companies have supplied computers and communications equipment to Myanmar’s army, and that the Government of Singapore Investment Corporation has invested heavily in Burma.

“We urge the Government of Singapore to immediately review its policies and to cut off all kinds of supports to the Burmese military,” he said.

The memorandum was later handed over to Singapore High Commission’s first secretary Mr Heng Aik Yeow.

But in Parliament on Monday, Foreign Minister George Yeo had said that Singapore’s trade with Myanmar last year amounted to just $1 billion, or 0.1 per cent of total trade.

He added that Myanmar was only 50th among Singapore’s trading partners, and that cumulative total direct investments by Singapore firms at the end of 2005 was just $742 million.

The Minister also stressed that defence sales to Myanmar over the years have not been substantial, and that Singapore will always behave in a responsible manner.

by Ian Timberlake, AFP, 20 Oct 2007

Three companies with strong links to Singapore are among seven firms blacklisted by the United States under fresh sanctions against Myanmar after its deadly suppression of pro-democracy protests.

According to President George W. Bush’s order the companies which are either based in or linked to Singapore are: Pavo Trading Pte Ltd, Air Bagan Holdings Pte Ltd and Htoo Wood Products Pte Ltd, which is also listed as being from Myanmar’s main city, Yangon.

The sanctions were announced Friday and are designed to target organisations with ties to Myanmar’s ruling junta in the hope it will pile more pressure on the regime.

“It’s about time the US did something like this,” said Dave Mathieson, a consultant on Myanmar to Human Rights Watch in Bangkok.

He said the sanctions “actually go after the money” of the junta, adding they also served as a “wake-up call” for Singapore .

Also named is Air Bagan Ltd of Myanmar, which last month made Singapore its second international destination. The airline’s chairman, Tay Za, arrived on the first flight.

Tay Za has “very, very strong links to the junta,” said Sean Turnell, an economics professor who specialises in Myanmar at Australia’s Macquarie University.

Tay Za is not among 11 individuals named by Bush as senior regime officials in Myanmar who are also subject to the fresh sanctions. {Note from Pseudonymity: See below}

The directory at a building in Singapore’s central business district lists Air Bagan Holdings and the two other blacklisted Singapore-linked firms as operating from a suite on the 24th floor.

But the suite carries no sign and workers in neighbouring offices said they knew nothing about what type of company operates from there, although they have seen people coming and going on weekdays.

An opaque blue sticker covered the door and obscured the interior. Phone and email messages to Pavo Trading were not immediately returned.

“We can’t really comment right now,” said Zaw Nay Oo, Air Bagan’s corporate affairs manager, who works from the airline’s sales office in a city shopping plaza.

Government spokespersons in Singapore also could not be immediately reached for comment.

The website for Pavo Trading says it is a sister company of Htoo Group of Companies and was established in 1999.

“The company’s main interest lies in export of timber and timber products from Myanmar,” says the website.

It says the group’s flagship company, Htoo Trading Co Ltd, is a logging firm established 17 years ago.

“Htoo Trading is run by Tay Za,” said Debbie Stothard of the Alternative ASEAN Network on Burma , a human rights group.

Bush’s executive order cuts off the designated officials and organisations – and those acting on their behalf – from the US financial system, the US Treasury Department said.

It means that “any assets these individuals and entities may have that are within US jurisdiction must be frozen, and US persons are prohibited from transacting or doing business with them,” the department said.

Singapore is chair of the Association of Southeast Asian Nations (ASEAN) and has led regional criticism of the junta’s crackdown last month, which killed at least 13 people. More than 3,000 were detained.

Observers say Singapore’s tough words against the junta must be matched by economic action given the city-state’s extensive links with the regime .

Human rights activists and other experts allege – without providing direct evidence – that junta funds have flowed into, or at least through Singapore, a regional financial centre .

Singapore strongly denies allegations that it allows banks based here to keep illicit funds on behalf of Myanmar’s secretive generals.

Prime Minister Lee Hsien Loong told CNN television recently that the country does not take “dirty money” and does not condone money laundering.

The city-state was among the regional countries Bush praised Friday for their response to Myanmar’s upheaval.

***********

Among the latest sanctions is a new Executive Order…….

The President has issued a new Executive Order that expands the Treasury Department’s existing authority and designates an additional 12 individuals and entities for sanctions. This Order expands the Treasury Department’s existing authority to designate individuals for sanctions to include: Individuals responsible for human rights abuses and public corruption; and individuals and entities who provide material or financial support to designated individuals or to the government of Burma.

In the Annex to the Executive Order, Tay Za and the 3 companies are listed among the 12 individuals & entities.

Tay Za, left, Chairman of Air Bagan, and Lim Kim Choon, Director-General and Chief Executive Officer of Civil Aviation Authority of Singapore. Click here to read the report. Photo: AFP

Editorial, The Irrawaddy, 17 Oct 2007

To keep up the momentum on the Burma issue and to persuade the military leaders to sit at the negotiating table, the international community and individual governments need to put pressure on the cronies who prop up the regime leadership.

One of the principal targets would be Tay Za, CEO of Htoo Trading Group and founder of Air Bagan, which recently launched services to Singapore and Thailand.

The young tycoon in his early 40s is Burma’s wealthiest business man, thanks largely to his close friendship with the country’s top leaders, including Snr-Gen Than Shwe and Gen Thura Shwe Mann, number three man in the regime.

Tay Za was recently in the hot seat, however. During the September demonstrations, he left Burma in a hurry to seek refuge elsewhere. News reports suggested that he left Burma on September 27.

Than Shwe’s wife Kyaing Kyaing and members of her family also left Burma the day before, on September 26, apparently for reasons of personal safety.

When street demonstrations started, Tay Za asked his staff to keep an aircraft on standby at Rangoon airport.

It has been suggested that he, Kyaing Kyaing and her party flew to Dubai. Diplomatic sources in Bangkok believe they went first of all to Singapore and then flew on to Laos on a chartered flight. From there they reportedly flew to Dubai, although some reports also suggest that they flew to Macau.

More troubles loom on the horizon for tycoon Tay Za because of his strong ties to the Than Shwe family.

Since the crackdown, people have been avoiding flying on Tay Za’s Air Bagan, and the airline’s planes have been reportedly grounded because of a shortage of passengers.

Public anger at Tay Za and the Htoo Trading Company is on the rise. The Htoo Trading Company was temporarily closed down during the demonstrations, and staff had to wait until now for their delayed salaries.

Air Bagan, which began operations in 2004, has a fleet of five aircraft, including A-310 airbus planes. It expanded its international network this year with the start of direct flights to Singapore and plans to fly later in 2007 to Kunming and Seoul.

Kyaing Kyaing and members of her family have shares in Air Bagan. More importantly, Tay Za and Kyaing Kyaing keep assets and savings in Singapore, where Tay Za has bought luxury apartments.

In 1990, while still in his twenties, Tay Za set up his company with an initial capital investment of US $333,333, concentrating on the export of timber and gaining access over the years to large areas of virgin forest.

Three years into the life of the Htoo Trading Company, Tay Za expanded his dealings with the regime by supplying the military with aircraft parts. He created Myanmar Avia Export, Burma’s sole representative of Russia’s Export Military Industrial Group, known as MAPO, and of the Russian helicopter company Rostvertol.

Military analysts say he was instrumental in the junta’s purchase of advanced MiG-29 fighter-bombers and helicopters from Russia.

Despite the presence of Russian arms dealers in Rangoon—confirmed by western diplomats—Htoo denies involvement in arms trading, although admitting that it does sell helicopters to the regime.

Tay Za’s close connection to the regime is undoubtedly one of the keys to his success. Ties to the top are vitally important when doing business in Burma, and Tay Za has no shortage of friends in high places.

He cleverly recruited the children of powerful generals in order to take them on board his company, which appears to be one of Tay Za’s business strategies. Aung Thet Mann, son of the junta’s number three, Gen Thura Shwe Mann, who is tipped to take over the leadership when Than Shwe goes, is on Tay Za’s executive business board.

Aung Thet Mann’s company, Ayer Shwe Wah, is now part of Htoo, and the general’s son is reaping big cash rewards from the arrangement. When the regime relaxed its ban on rice exports, Aung Thet Mann’s company was awarded the first rice export licence, providing for the delivery of 11,000 tons to Bangladesh and Singapore.

The US and the EU imposed visa bans on Tay Za and businessmen who are closely associated with the Than Shwe regime. But it is important to take further steps to freeze assets Tay Za holds overseas, possibly in Singapore.

The US government should talk to one of its strongest allies in the region about the possibility of taking action against Tay Za. Rumor has it that Tay Za is considering moving his bank accounts and other assets in Singapore to Macau.

Tay Za and the Than Shwe regime are tightly linked–if Tay Za and his empire begin to feel shaky, we’ll see Than Shwe make more political concessions with the opposition and show readiness to bend to international pressure.

On 28 Sept 2007, Amnesty International urged the United Nations to immediately impose a mandatory arms embargo on Burma/Myanmar. One of the things mentioned by Amnesty was…..

In addition there have been allegations about Myanmar’s military relations with Singapore. According to Jane’s Intelligence Review, in 1998 Singapore supplied Myanmar with a purpose-built factory to manufacture assault rifles and ammunition. The plant was designed and built by a state owned Singapore company with assistance from Israeli consultants, then dismantled and re-assembled in Myanmar.

According to a recent report by the Associated Press…

Most known arms transfers to Myanmar are legal, and some are even reported to the United Nations. But other transactions are murkier, as countries more sensitive to international opinion apparently try to mask their activities. Analysts say these include India, as well as Israel and Singapore.

I did some digging and came across these news reports, by South China Morning Post and Reuters, written a decade ago……

$$$$$$$$$$

Singapore weapons factory for junta, William Barnes in Bangkok, 22 July 1998

Singapore has supplied Burma’s military regime with an arms factory that was designed and prefabricated by the island state’s own weapons maker.

The weapons made in the factory – thought to be EMERK-1 assault rifles with a bull-pup configuration, which shortens their length, had already started to be issued to soldiers guarding the controversial Yadana gas pipeline, according to the latest issue of the authoritative magazine Jane’s Defence Weekly.

Singapore has previously supplied the regime with weapons at a critical time and has also built a cyber-war centre in Rangoon capable of telephone, fax and satellite communications.

The purpose-built arms factory was created by Chartered Industries of Singapore, with the help of Israeli consultants.

Although no official announcement has been made, the plant is understood to have arrived in Rangoon in 40 containers aboard the Singapore-registered vessel Sin Ho in February.

A decade ago – near the height of nationwide pro-democracy protests led by opposition leader Aung San Suu Kyi – Singapore shipped tonnes of ammunition, mortars and other war material to Burma.

The shipments were marked as coming from a subsidiary of Chartered Industries of Singapore – Allied Ordinance, Singapore.

Chartered Industries is the weapons arm of Singapore Technologies which supplied the regime with its highly efficient cyber-war centre.

The supplies were sent only weeks after the junta emerged following the retirement of the old dictator, Ne Win.

They included rockets manufacturered under license in Singapore, but exported without authorisation from Sweden.

Only China is more important to the dictatorial military regime than Singapore, which has frequently defended not only its links to Rangoon, but the junta itself.

Last November, Singapore tried to water down a United Nations General Assembly resolution critical of the regime’s refusal to recognise the overwhelming victory of Ms Aung San Suu Kyi’s National League for Democracy in 1990 elections and widespread human rights abuses.

“Our position is different. We have concrete and immediate stakes,” argued the Singapore representative, Bilahari Kausikan, in a letter to the Swedish mission which drafted the resolution.

Singapore had used weapons sales, military training and intelligence co-operation to “win a sympathetic hearing at the very heart of Burma’s official councils”, said Jane’s Intelligence Review in March.

At about the time the small arms factory was arriving in Rangoon, Burma’s intelligence chief, General Khin Nyunt, told a co-ordinating board for the Myanmar-Singapore Joint Ministerial Working Committee that his officials should “give priority to projects arranged by Singapore”.

$$$$$$$$$$

U.S to protest arm sales to Burma, Reuters, 23 March 1994

WASHINGTON (Reuter) – The United States is set to protest arms sales by China and three other countries known to be arming Burma’s ruling military junta, administration officials said Wednesday.

The State Department is preparing to make official diplomatic protests to Singapore, Portugal and Poland as well as to China on the shipments, they said.

The planned diplomatic protests are expected to be ready ”very soon,” an official who follows Burma said. They are part of a stepped-up drive to end what the United States regards as brutal suppression of human rights by the junta, which calls itself the State Law and Order Restoration Council, or SLORC.

The strategy is the result of a Clinton administration review approved at an inter-agency meeting of senior policymakers on March 10. It is aimed at winning the unconditional release of detained opposition leader Aung San Suu Kyi and forcing the SLORC to open talks with her political party.

Aung San Suu Kyi, the Nobel Peace Prize winner, is in her fifth year of house arrrest in Rangoon, the Burmese capital. Her National League for Democracy won a landslide victory in elections in 1990, but the military voided the vote.

China is by far the biggest arms supplier to the Burmese military. U.S. officials do not expect their overtures to Beijing to make much headway, especially in light of strains over U.S. criticism of China’s human rights record.

Washington does not plan to make a big deal of Burma with Beijing because of more pressing business, including getting it to go along with the U.S. strategy for forcing North Korea to allow full inspection of its nuclear program.

Instead, the plan is to focus on the smaller suppliers to boost the junta’s international isolation and pressure it to ease repression.

“It’s a matter of working on the margins where we can,” one official said. “It is a government that, controlled by the military, is using these guns and bullets to oppress the Burmese people and prosecute a civil war on the ethnic groups.”

Singapore has told the United States it would halt arms sales to Burma if the United Nations sponsored an international arms embargo. In the absence of a worldwide embargo, it fears another supplier would simply step in if it stopped. Poland and Portugal have let it be known that any arms shipments to Burma are in violation of stated government policy, officials said.

The Clinton administration also plans to boost efforts to persuade the U.N. Secretary General to name a special envoy to press the military to start a dialogue with Aung San Suu Kyi. It has decided to defer a decision on sending an ambassador to Rangoon until a later date.

By Daryl Loo, 10 Oct 2007

SINGAPORE (Reuters) – Singapore, one of Myanmar’s biggest investors, is under pressure from rights groups to use its economic clout to push the generals down along a more democratic path.

According to the Economist Intelligence Unit, Singapore was Myanmar’s largest source of foreign funding last year with US$47.5 million in investments, followed by Russia and Britain.

Singapore is a key investor in Myanmar’s tourism sector, provides medical care for the regime’s generals and is seen as a financial centre for the Myanmar elite.

“There are not many countries that the military regime can rely on today, and Singapore is one of them,” Sann Aung, a Bangkok-based leader of the government-in-exile set up after the junta ignored the 1990 election results, told Reuters.

The city-state’s links with the junta have come under fire from rights groups and led to calls to take a tougher stance.

European Union parliamentarians visiting the island last week called on Singapore to ease bank secrecy laws and seize assets of Myanmar’s generals, or risk a proposed pact with the EU.

Burma activist groups last week urged the U.S. Senate foreign relations committee to compel Singapore banks to freeze the accounts of junta leaders, and prohibit U.S. institutions from dealing with those that refuse.

Freezing the overseas assets of Myanmar’s generals “would at least deprive the regime of the means to buy more weapons, and put pressure on it to carry out reforms,” said Debbie Stothard of the Bangkok-based Alternative ASEAN Network on Burma.

But Singapore Prime Minister Lee Hsien Loong denies the generals are using Singapore as a money-laundering centre.

“We don’t play dirty money, we don’t condone money laundering. Our rules against that are as strict as any other financial centre – London, Hong Kong, New York,” Lee told CNN.

Singapore’s three banks — all of which operate offices in Myanmar — have declined comment, citing banking secrecy laws.

“Dirty List”

Analysts say that without Singapore’s expertise in areas such as airline, airport, and hotel management, Myanmar would be a much less comfortable place for its ruling elite.

Myanmar’s top international airline, Myanmar Airways International, is a joint venture between the Myanmar government and Region Air, a company owned by hotel and property tycoon Ong Beng Seng, one of Singapore’s best-connected businessmen.

Activist group Burma Campaign UK lists 10 Singapore firms on its “Dirty List” of companies for their involvement in Myanmar, including banks DBS, UOB and OCBC, and conglomerate Keppel Corp.

Yangon’s The Strand Hotel, Myanmar’s top hotel and sister to Singapore’s Raffles Hotel, is jointly owned by Myanmar’s tourism authorities and Singapore-based General Hotel Management.

The Singapore bourse is also host to the only Myanmar listed firm — Yoma, a real estate firm with close junta links.

Myanmar, too, has come to the aid of a friend in need. When Indonesia banned sand exports that feed the construction sector, general Than Shwe was quick to offer his sand and granite.

General Hospital

Singapore also gives the ageing generals access to top hospitals, where security guards shield them from the press.

Senior General Than Shwe, 73, visits Singapore for regular medical checks. Myanmar prime minister General Soe Win, 59, was treated for cancer at Singapore’s General Hospital for months before he reportedly died on October 2. Lee says denying them medical treatment would be inhumane.

“I mean, somebody is sick, he wants to come to Singapore, he needs treatment and you’re telling me that I shouldn’t treat him because he’s not a good man?” he told CNN.

Myanmar expert David Steinberg of Georgetown University told Reuters that Singapore could play a big role to end the crisis.

“(The junta) consults with Singapore leaders,” said Steinberg, adding he favored a “quiet” approach. “I think a strong stand by Singapore will be helpful. But a strong stand has to be a quiet stand. The private advice is absolutely critical.”

Lee’s father, Singapore’s first prime minister and now “Minister Mentor”, said in unusually blunt remarks that Myanmar’s leaders had pushed a “hungry and impoverished people to revolt”.

“These are rather dumb generals when it comes to the economy,” Lee, 84, said in an interview, adding a political solution has to include the military who alone have the ability to hold the country together.

Tay Za(L), Chairman of Air Bagan, and Lim Kim Choon, Director-General and Chief Executive Officer of Civil Aviation Authority of Singapore, toast Myanmar’s Air Bagan after its maiden flight to Singapore at the Changi International Airport in Singapore. Singapore became the second international destination for Myanmar’s Air Bagan on Friday with the airline’s launch of daily flights between the two countries. Photo and report by AFP. Read the full report after Eric Ellis’ article. Related reports: Asia’s financial parking lot and TIME’s Going Nowhere.

Web of cash, power and cronies by Eric Ellis, The Age, 29 Sept 2007

SINGAPORE isn’t just skilled at mandatory executions of drug traffickers, running an excellent airport and selling cameras on Orchard Road. It also does a useful trade keeping Burma’s military rulers and their cronies afloat.

Much attention is placed on China and its coming hosting of the Olympic Games as a diplomatic pressure point on the rampant Burmese junta. But there is a group of government businessmen-technocrats in Singapore who will also be closely monitoring the brutality in Rangoon. And, were they so inclined, their influence could go a long way to limiting the misery being inflicted on Burma’s 54 million people.

Collectively known as “Singapore Inc”, they gather around the $A150 billion state-owned investment house Temasek Holdings, controlled by a member of the ruling Lee family.

With an estimated $A3 billion staked in the country (and a more than $20 billion stake in Australia), Singapore Inc companies have been some of the biggest investors in and supporters of Burma’s military junta — this while its Government, on the rare times it is asked, suggests a softly-softly diplomatic approach towards the junta.

When it comes to Burma, Singapore pockets the high morals it likes to wave at the West elsewhere. Singapore’s one-time head of foreign trade once said as his country was building links with Burma in the mid-1990s: “While the other countries are ignoring it, it’s a good time for us to go in … you get better deals, and you’re more appreciated … Singapore’s position is not to judge them and take a judgemental moral high ground.”

But by providing Burma’s pariah junta with the crucial equipment mostly denied by Western sanctions, Singapore has helped keep the junta and its cronies afloat for 20 years, since the last time the generals killed the citizens they are supposed to protect.

Withdraw that financial support and Burma’s junta would be substantially weakened, perhaps even fail. But after two decades of profitable business with the trigger-happy generals and their cronies, that’s about the last thing Singapore is likely to do. There’s too much money to be made.

Hotels, airlines, military materiel and training, crowd control equipment and sophisticated telecoms-monitoring devices for its secret police — Singapore is manager and supplier to the junta, and the “cronified” economy it controls.

It’s impossible to spend any time in Burma and not make the junta richer, thanks to Singapore suppliers’ contracts with the tourism industry. Singapore’s hospitals also keep Burma’s leaders alive — 74-year-old junta leader Than Shwe has been getting his intestinal cancer treated in a Singapore government hospital, protected by Singapore security. Singapore’s boutiques keep junta wives and families cloaked in Armani, and its banks help launder their money and that of Burma’s crony drug lords.

Much of Singapore’s activity in Burma has been documented by an analyst working in Prime Minister John Howard’s direct chain of command, in the Office of National Assessments. Andrew Selth is recognised as an authority on the Burmese military. Now a research fellow at Queensland’s Griffith University, Mr Selth has written extensively on how close Singapore is to the junta.

Often writing as “William Ashton” in the authoritative Jane’s Intelligence Review, Mr Selth has described in various articles how Singapore has sent the junta guns, rockets, armoured personnel carriers and grenade launchers, some of it trans-shipped from stocks seized by Israel from Palestinians in southern Lebanon.

Singaporean companies have provided computers and networking equipment for Burma’s defence ministry and army, while upgrading the bunkered junta’s ability to network with regional commanders — so crucial as protesting monks take to the streets of 20 Burmese cities, causing major logistical headaches for the Tatmadaw, the Burmese military.

“Singapore cares little about human rights, in particular the plight of the ethnic and religious minorities in Burma,” Mr Selth writes.

“Having developed one of the region’s most advanced armed forces and defence industrial support bases, Singapore is in a good position to offer Burma a number of inducements which other ASEAN (Association of South-East Asian Nations) countries would find hard to match.”

Singapore’s Foreign Minister, George Yeo, is the current chairman of ASEAN.

Mr Selth says Singapore also provided the equipment for a “cyber war centre” to monitor dissident activity while training Burma’s secret police, whose sole job seems to be ensuring pro-democracy groups are crushed.

Monitoring dissidents is an area where Singapore has particular expertise. After almost five decades in power, the Lee family-controlled People’s Action Party ranks behind only the communists of China, Cuba and North Korea in leadership longevity, skilled in neutralising opposition.

“This centre is reported to be closely involved in the monitoring and recording of foreign and domestic telecommunications, including the satellite telephone conversations of Burmese opposition groups,” Mr Selth writes.

Singapore Government companies, such as leading arms supplier Singapore Technologies, dominate the communications and military sector in Singapore. “It is highly unlikely,” Mr Selth writes, “that any of these arms shipments to Burma could have been made without the knowledge and support of the Singapore Government.”

He notes that Singapore’s ambassadors to Burma have included a former senior Singapore armed forces officer, and a past director of Singapore’s defence-oriented Joint Intelligence Directorate, people with a military background rather than professional diplomats.

He writes that after the 1988 crackdown, when the junta killed 3000 protesters, “the first country to come to the regime’s rescue was in fact Singapore”.

When I interviewed Singapore Technologies chief executive Peter Seah at his office in Singapore, I asked about the scale model of an armoured personnel carrier made by his company on his office table. He said ST sold the vehicles “only to allies”.

Does that include Burma, I asked, given that Singapore controversially helped sponsor the military regime into ASEAN?

Mr Seah was non-specific: “We only sell to allies and we make sure they are responsible.” He didn’t say how. ST and Temasek don’t respond to questions about their activities in Burma.

Singapore is so close to Burma that one of its diplomats there wrote a handbook for its business people there. Matthew Sim’s Myanmar on my Mind is full of useful tips for Singaporean business people in Burma. “A little money goes a long way in greasing the wheels of productivity,” he writes.

A chapter headed “Committing Manslaughter when Driving” describes the appropriate action if a Singaporean businessman accidentally kills a Burmese pedestrian. “Firstly, the international businessman could give the family of the deceased some money as compensation and dissuade them from pressing charges. Secondly, he could pay a Myanmar citizen to take the blame by declaring that he was the driver in the fatal accident. An international businessman should not make the mistake of trying to argue his case in a court of law when it comes to a fatal accident, even if he is in the right.”

Mr Sim says many successful Myanmar businessmen have opened shell companies in Singapore “with little or no staff, used to keep funds overseas”. The companies are used to keep business deals outside the control of Burma’s central bank, enabling Singaporeans and others to transact with Burma in Singapore.

He may be referring to junta cronies such as Tay Za and the drug lord Lo Hsing Han. Lo is an ethnic Chinese, from Burma’s traditionally Chinese-populated and opium-rich Kokang region in the country’s east, bordering China. He controls a massive heroin empire, and one of Burma’s biggest companies, Asia World, which the US Drug Enforcement Agency describes as a front for his drug-trafficking. Asia World controls toll roads, industrial parks and trading companies. Singapore is the Lo family’s crucial window to the world, as it controls a number of companies there. His son Steven, who has been denied a visa to the US because of his links to the drug trade, married a Singaporean, Cecilia Ng, and the two reportedly control Singapore-based trading house Kokang Singapore.

A former assistant secretary of state for the US Bureau of International Narcotics and Law Enforcement Affairs, Robert Gelbard, has said that half Singapore’s investment in Burma has “been tied to the family of narco-trafficker Lo Hsing Han”.

Tay Za, who is romantically linked to a daughter of junta leader Than Shwe, is also well known in Singapore. He was prominent in the Singapore media last year, toasting the launch of his airline Air Bagan with the head of Singapore’s aviation authority. Dissident groups say the trade-off for Tay Za’s government business contracts in Burma is to fund junta leaders’ medical trips to Singapore.

Eric Ellis is an Australian journalist and correspondent in South-East Asia.

$$$$$$$$$$$$

Myanmar’s Air Bagan launches Singapore service, Sep 7, 2007

SINGAPORE (AFP) — Singapore became the second international destination for Myanmar’s Air Bagan on Friday with the airline’s launch of daily flights between the two countries.

The new service, offering 14 flights each week, begins amid an international outcry against the Myanmar junta’s recent crackdown on dissent, and questions over international engagement with the regime.

The Air Bagan Airbus A310-200, fully loaded with 224 passengers and guests, landed about 30 minutes late on its inaugural flight from Yangon.

Tay Za, the airline’s chairman, told a welcoming ceremony at Changi Airport that the Singapore service marks “a new phase” of Air Bagan’s operation.

Singapore is only the second international destination for the carrier after service to Bangkok began in May, he said.

“I believe that our service will promote the relationship between the two countries, at the same time boost tourism with ASEAN nations,” he said before the audience were showered in gold confetti.

Two other carriers, Singapore Airlines’ regional unit SilkAir, and Jetstar Asia, already link Singapore and Yangon.

Lim Kim Choon, director general of the Civil Aviation Authority of Singapore (CAAS), said the Air Bagan service begins “at an opportune” time when growth in passenger traffic between the two countries is at its strongest.

Last year, 156,000 people travelled between the countries, 23.5 percent higher than the previous year, he said in a statement. In the first six months of this year, the growth continued as 92,000 passengers made the trip, he said.

Asked how much difficulty Air Bagan has had in securing international landing rights, Gopi Bala, the airline’s senior marketing manager, told AFP: “It’s been easy.”

He said Kunming, China, is expected to become an Air Bagan destination by the end of this year.

According to Amnesty International, more than 150 people have been detained in Myanmar since August 19, when activists began protests against a huge hike in fuel prices that left some people unable to afford even bus fare.

The most serious showdown occurred in Pakokku, about 500 kilometres (310 miles) north of the commercial capital Yangon.

Hundreds of Buddhist monks held a group of local and security officials hostage for several hours in Pakokku on Thursday, after troops violently broke up an anti-junta protest, residents said.

US president George W. Bush has called the junta’s crackdown on the dissent in Myanmar “tyrannical” and called for the release of the prisoners.

Ibrahim Gambari, the United Nations pointman in efforts to promote national reconciliation in Myanmar, warned Wednesday that the crackdown made it “more difficult to maintain international support for engagement with Myanmar.”

On Friday, Philippines Foreign Secretary Alberto Romulo said Southeast Asia’s controversial policy to engage Myanmar, a pariah in the west due to its human rights record, was not working out.

Asked about the timing of the new Air Bagan service, as criticism of the regime mounts, Bala said, “I refuse to answer on that.”

A spokesman for Singapore’s Ministry of Foreign Affairs told AFP that the city-state has an air services agreement with Myanmar.

“Singapore is an air hub and we welcome airlines of all countries to fly to Singapore,” the spokesman said.

“It is not clear that further isolating an already isolated government will have any beneficial impact on internal developments in Myanmar.”

Singapore has backed the UN’s efforts on Myanmar. It has also supported the Association of Southeast Asian Nations’ (ASEAN) calls for the Myanmar government to stick to its “Roadmap to Democracy” and for the release of democracy icon Aung San Suu Kyi.

$$$$$$$$$$$

Asean double talk by Amando Doronila, Columns, Inquirer, 5 Oct 2007

MANILA, Philippines — When the Association of Southeast Asian Nations (Asean) expressed “revulsion” at the brutal crackdown of protesters calling for the end of Burma’s military dictatorship, the statement was hailed as the strongest condemnation yet by Asean of the repressive Burmese junta.

It was also a disgusting manifestation of Asean’s prevarication and double talk on Burma, and a revelation that Asean is the weakest regional bloc of nations with hardly any influence at all to bring pressure on the Burmese generals to negotiate reconciliation with the democracy movement led by Aung San Suu Kyi.

The statement, issued after the Asean foreign ministers’ meeting on the sidelines of the United Nations General Assembly, urged the junta “to exercise utmost restraint and seek a political solution” to the crisis. The statement said the ministers “were appalled” by reports that automatic weapons were being used to fire at the protesters in Rangoon and demanded that the government “immediately desist from the use of violence.”

In the statement issued by Singapore’s Foreign Minister George Yeo, the ministers called for the release of all political prisoners, including Suu Kyi. Singapore is now chair of Asean.

To show how the junta regards Asean as no more than a nuisance, the slaughter continued unabated for days, with at least 10 more people being killed (more than a hundred according to human rights groups). More than a thousand monks have been seized in their pagodas and detained in concentration centers outside Rangoon since last week’s massacre.

The Burmese massacre has confronted Asean with its worst crisis of credibility as a regional organization that can be taken seriously in its aspirations to be a significant political and economic entity since its founding 40 years ago.

Singapore, as chair for the rest of 2007, speaks on behalf of the 10 Asean members, but its chairmanship and the position it pronounces in this crisis underline Asean’s prevarication on the case of Burma.

No less disgusting than Asean’s righteous condemnation was that of the President Gloria Macapagal-Arroyo, who took a moral high ground in a speech at the Assembly. She said, “This is the time for Burma to return to the path of democracy and to release Aung San Suu Kyi and to involve all parties … in the democratization and the constitutional process.” Without being embarrassed, she held up the Philippines as “the most democratic country” in our region. “We have no tolerance for human rights violations at home and abroad,” she said.

These pronouncements from the more articulate Asean leaders could only have served to increase the scorn of Gen. Than Shwe’s cabal for Asean as a toothless creature.

When Ibrahim Gambari, the UN’s special envoy who had an urgent mission to end the crackdown, left Burma after four days of talks with the junta and Suu Kyi, he said he had delivered a “strong message” to the junta. But UN Secretary General Ban Ki-moon said he could not call the mission a “success.”

Singapore’s Prime Minister Lee Hsien Loong published “an unusually severe” letter, which “strongly urged” General Shwe to “work with Mr. Gambari to try to find a way forward,” saying that the conflict in Burma “will have serious implications not only for itself (Burma) but also for Asean and the whole region.” Apparently, the junta did not listen to this appeal.

But Singapore’s dilemma, as well as Asean’s hypocrisy, was underlined by Singapore’s extensive economic relations with Burma, which have thrown an economic lifeline to the junta to blunt economic and political sanctions from the United States and the European Union, among others. Without referring to the economic relations between Burma and key players, such as China, Japan, India and Russia, Singapore’s ties with Burma are cited in the context of Asean’s weak influence in effecting political change in Burma.

Andrew Selth, a research fellow at Queensland’s Griffith University, has written in Jane’s Intelligence Review that with an estimated $2.65 billion at stake in Burma, Singapore companies “have been some of the biggest investors in Burma’s military junta.” Selth said that Singapore “has sent the junta guns, rockets, armored personnel carriers and grenade launchers.” Singapore companies have also provided computers and networking equipment for Burma’s defense ministry and army, “while upgrading the bunkered junta’s ability to network with regional commanders.”

A former assistant secretary of state for the US Bureau of Narcotics and Law Enforcement Affairs, Robert Gelhard, has said half of Singapore’s investment in Burma has “been tied to the family of narco-trafficker Lo Hsing Han.”

Singapore is hosting Asean’s annual meeting in November, when the organization is scheduled to approve its first charter designed to make it a more effective rules-based organization. The charter was drafted in Manila this year, and was hailed as a “victory for human rights,” but due to the Asean concept of making decisions by consensus, the draft fudged provisions for sanctions to discipline member states violating human rights.

The Burmese crackdown pushes Asean to a moment of decision on the issue of transforming it into a rules-based organization with disciplinary and binding authority. This will test whether Asean members with economic interests in Burma, including Singapore and Thailand, can summon the political will to bring Burma into line with the draft’s objectives. The showdown in Singapore in November could break up Asean’s project of political integration or result in Burma’s expulsion. The second outcome appears remote.

Asia’s ‘Financial Parking Lot’
By William Boot/Singapore
The Irrawaddy, September 1, 2007

Singapore keeps its surface image relatively clean, but allegations persists that the city-state has become an economic tool for the region’s worst regimes

The slightly dilapidated five-story building in Singapore’s business district known as Burma Mall houses numerous small shops, cafes and under-the-counter, cash-remitting services.

It’s a familiar sight across East Asia’s richer cities, from Kuala Lumpur to Hong Kong, wherever contracted Indonesians, Thais, Filipinos and, to a lesser extent, Burmese work.

Burma Mall—real name, Peninsula Plaza—caters to the lowly laborer or homesick student seeking out a bowl of moh hin gha (fish and noodle soup) and probably money launderers, too.

But it’s not a visible hangout of Burma’s big money dealers in Singapore, like Tun Myint Naing, also known as Steven Law, and his father Lo Hsing Han, or the junta generals who make frequent visits to the city-state for medical treatment and, perhaps, a little business on the side. They move in much more exalted circles.

Singapore’s opposition Democratic Party leader Chee Soon Juan would probably say over-privileged circles.

Singapore ranks a noble fifth in the world index compiled by the Berlin-based, anti-corruption-monitoring organization Transparency International. Burma is ranked 160th out of 163 investigated countries.

But the two countries have curiously close business relations that seem incongruous for a Singapore government seemingly so obsessed with being perceived as squeaky clean.

While ranking Singapore highly on its anti-corruption index, a report by TI says: “Singapore could do more to discourage corruption in a broader regional context, in cooperation with … government leaders of neighboring states.”

Chee Soon Juan has tried without success to force the Singapore government to disclose the extent of its business dealings with the Burmese company Asia World, run by Lo Hsing Han and Steven Law, both barred from the US for alleged drug-running rackets but who move freely in and out of Singapore.

Alongside most other countries in Southeast Asia, Singapore is a model of rectitude, but even TI finds fault with the city-state’s failure to hold itself accountable to inquirers like Chee Soon Juan.

“National Integrity Systems in East and Southeast Asian countries still have profound weaknesses,” says the TI report. “Even Hong Kong and Singapore still have significant room for improvement, for example in involving civil society in government decision-making processes.”

Efforts by Chee Soon Juan to get the Singapore government to make public the details of its investments in Burma—supposedly made on behalf of Singaporeans—have been met with silence or vague answers. on one occasion he was baldly told that government investment in Burma was “above board.”

Chee Soon Juan told The Irrawaddy: “I have not received any recent information on Burma money laundering in Singapore, although I understand that the practice is rife with respect to many other countries, for example China, Indonesia and Russia.”

Chee has been jailed for speaking in public without a permit and was declared a bankrupt in 2006—debarring him from elections until 2011—for failing to pay fines of US $330,000 after being convicted of defaming government leaders such as Lee Kuan Yew. He is now also barred from traveling abroad because of his debt.

“Singapore’s relationship with the Burmese junta is pragmatic, in both commercial and what one might call ‘national need’ terms,” suggested a Western embassy regional analyst in Bangkok, speaking on condition of anonymity.

“Singapore’s foreign minister, George Yeo, was one of the first regional government officials to trek out to that oddly located new capital Naypyidaw earlier this year. But he did not go there to admire the place, it was for national need. Singapore needed building materials, such as a supply of sand that Indonesia had just stopped delivering,” the analyst said.

“Likewise, Singapore’s construction companies need somewhere to expand. Burma has got absolutely no infrastructure worth the Singaporean government-owned investment agencies such as Temasek to buy into, like Thailand, but hotel developments would do nicely. In return, we do not dig too deep,” the analyst added.

About 50,000 Burmese live and work or study in Singapore, and many families back home depend on remittances. But Burma Mall, wedged between the trendy nightlife Quays quarter and the ritzy hotel district that includes world famous Raffles, is believed to serve more as a conduit for others who aspire to emulate the success of Steven Law and his family.

Burma Mall is not the most fashionable shopping venue in Singapore, but there’s big property price inflation in the city—fueled, many analysts believe, by investors parking money to avoid tax and other official obstacles to money movements.

The monthly rent on a shop in the mall is around $2,000. Some of the tenants would have to sell a lot of jars of dried foodstuffs, leather trinkets or Burmese-style clothes to cover overhead and still turn a profit.

“No one can prove anything, but some of us suspect that many of those shops inside that so-called Burma Mall are fronts for other activities, where the real business is going on,” said a Singaporean running a street-level business adjacent to the mall.

Singapore is estimated to have invested up to $2 billion in Burma since the country’s tightly shut economic door opened a crack in 1988. Much of the money has gone to develop the tourism industry, despite efforts by Western countries to boycott holiday visits on the grounds that it benefits the regime.

Asia World is a major construction contractor, and much of Singapore’s investment in Burma is linked to that company. Steven Law has a Singaporean wife with business and political contacts in the city-state.

For the 2006-7 financial year ended in March, Singapore was listed by Burma’s Ministry of Commerce as the third-largest trading partner behind Thailand and China, with bilateral trade for the year totaling $1.21 billion.

Financial analysts are perplexed by Singapore’s current luxury property development boom—hence, the need for that Burmese building sand—with land and condominium prices and rents soaring by as much as 150 percent. The overall economy is not on fire, but the consensus view is that the city-state has become a haven for no-questions-asked money “parking.”

Indonesia (ranked 130 in the TI corruption index) is considered to be a major source of such money and Singapore is not fussy about requiring its banks to report large incoming transactions or interest payments. The EU eyes Singapore with some suspicion as a tax shelter.

It’s not surprising, then, that Singapore comes near the top of another global ranking – the tiny city-state is home to more than 50,000 US dollar millionaires.

Ong Ying Ping, the founder of a Singapore-based law company that provides advice on spotting and thwarting illegal money movements, notes: “While anti-money laundering laws have been or are being adopted in over 100 countries around the world, no country yet requires its financial institutions to detect money laundering.

“The effectiveness of anti-money laundering laws has been mixed, falling far short of the ideal of strict, fair and universal enforcement with well-knit international cooperation.”

by Stephen Mayne, 22 July 2007, Opinion, The Age

WHEN shareholders in Perth-based energy utility Alinta Ltd gather to vote on the $15 billion carve-up of the company on August 13, few of them will realise the remarkable historical event they will trigger.

In accepting $4.5 billion of cash from Singapore Power for a suite of Australian electricity and gas distribution assets, Alinta shareholders will lift the total value of Australian business assets controlled by the Singapore Government to almost $30 billion.

This will exceed the value of commercial assets owned by our own Federal Government, which is surely an unprecedented situation for any First World country. How can a foreign power own more of Australia than our own government?

While ordinary Singaporeans have limited democratic rights and still don’t enjoy benefits such as Australia’s minimum wage (the world’s highest), the Singapore state has amassed an empire worth more than $200 billion — and it has now put more of it into Australia than any other country.

The investments come from two discreet vehicles. The $100 billion-plus Government Investment Corporation (GIC) invests Singapore’s foreign reserves around the world while Temasek Holdings owns the shares in government-controlled businesses such as Singapore Airlines, Singapore Power, Singtel and the giant DBS Holdings financial conglomerate.

Few people realise how much these two vehicles have ploughed into Australia since 1995, buying many sensitive and prestigious assets such as Optus, Myer Melbourne and large parts of the old State Electricity Commission of Victoria.

This compares starkly with the Howard Government, which has raised about $65 billion from privatisation — the biggest chunks coming from selling 83 per cent of Telstra ($45 billion), 50.1 per cent of the Commonwealth Bank ($5.15 billion) and the nation’s airports ($8.5 billion).

With Medibank Private also slated for sale next year, the Government is left with only Australia Post, which made a net profit of $370 million in 2005-06 and is therefore worth about $7 billion. The residual 17 per cent stake in Telstra is worth $10 billion but the Government doesn’t control it.

While other nations such as China, Singapore, Russia, Korea, Kuwait and Norway build up huge sovereign funds, Australia, with its world-beating dowry of natural assets, still has a Federal Government with a negative net worth of $10 billion in the middle of an unprecedented commodities boom.

Even including the $52 billion in the Future Fund and all land and defence assets, these assets do not exceed the $50 billion in outstanding federal debt and $111 billion in unfunded superannuation liabilities as at June 30, 2007.

The contrast with Singapore is stark indeed. This island nation of just 4.4 million people in a land mass broadly equivalent to Melbourne has amassed vast public wealth, although its private wealth is nowhere near the $8130 billion that the federal Treasury and Australian Bureau of Statistics estimate Australia’s 21 million citizens have accumulated.

So how did this happen? It all started when Singapore Airlines wanted to buy the cornerstone 25 per cent stake in Qantas offered by the Keating Government in 1993, but lost out to British Airways. It took the defeat very badly.

Its first major successful move came in 1995 when a Singapore government body, Capita Land, bought a controlling interest in Australand, the property developer that built the Commonwealth Games village. This stake is now worth $1.1 billion.

After staying out of the original $30 billion energy sector privatisation program in Victoria, Singapore Power, which is fully owned by the state, picked up the monopoly electricity transmission business Powernet for $2.1 billion in June 2000.

This was quickly followed by Singtel’s $14 billion bid for Optus in 2001. Singtel is 56 per cent government-owned, so Optus is now more publicly owned than Telstra — albeit by a foreign power. I, for one, switched my mobile phone contract from Optus to Telstra as a small consumer protest when Australian drug trafficker Van Nguyen was executed by the immovable Singapore authorities in 2005.

The next big bite was Singapore Power’s $5.1 billion acquisition of TXU’s Australian energy portfolio in April 2004, although $2.2 billion of retail and generation assets were on-sold to China Light & Power in March 2005. Late in 2005, 49 per cent of the remaining Australian power assets were floated in a vehicle called SP Ausnet, raising $1.3 billion.

This reduced the total power sector investment to $3.8 billion, but now we have the huge Alinta deal in which Singapore Power is offering $4.5 billion in cash to become the monopoly gas distributor in NSW and the largest distributor of electricity in Victoria.

It will even own 50 per cent of ActewAGL — the company that keeps the lights on at Parliament House in Canberra.

Coinciding with the Alinta deal has been a recent splurge of property investments. Frank Lowy sold to GIC a 50 per cent stake in Westfield Parramatta, Australia’s third-most valuable shopping centre, for $717 million in May.

An even more prestigious purchase last month was the Myer Melbourne complex, which is now one-third owned by GIC after it teamed up with the Myer family and the Commonwealth Bank to buy it for $600 million.

GIC already owns the Park Hyatt hotel in Melbourne, along with Sydney’s Queen Victoria Building and the Strand Arcade, and there’s been recent press speculation that it will buy into Westfield’s Doncaster Shoppingtown to help fund a $400 million redevelopment.

But it doesn’t stop there.

Even child-care behemoth ABC Learning, which receives $3 million a week from Australian taxpayers to look after 40,000 children and has former children’s minister Larry Anthony on its board, this month issued 12 per cent of its shares to Temasek for $401 million.

In some countries, child care is provided by the state, yet our Government is now funding a company which has a foreign government as its largest shareholder to deliver this service. All this must make for interesting discussions when John Howard catches up with his Singaporean counterpart, Lee Hsien Loong, or his autocratic father, Lee Kuan Yew, who is still “GIC chairman minister mentor” at the ripe old age of 83.

Peter Costello was busily showing Lee Kuan Yew around Federal Parliament a few weeks ago and, given the 2003 Free Trade Agreement, it’s fair to assume relations remain close.

The same can’t be said for Singapore and Thailand. In January 2006, Temasek bought control of Shin Corp — the family company of Thailand’s former prime minister Thaksin Shinawatra — for $US1.9 billion ($A2.1 billion) in a deal that sparked widespread protests and a military coup.

The generals have since crippled Shin Corp’s telecoms and satellite business to the point where Singapore has dropped well over $1.5 billion and relations between the two countries are severely strained.

Could Singapore’s financial imperialism ever cause tensions here? The only time Singapore has faced any takeover resistance in Australia was in 2000 when Peter Costello blocked a proposed bid for Westpac by financial conglomerate DBS Holdings, which is 28 per cent owned by Temasek.

However, Singapore Airlines remains bitter about losing almost $500 million in the Ansett collapse and being denied access to the lucrative Pacific route, which might explain why it is now funding Tiger Airways’ assault on the Australian domestic market in an attempt to damage Qantas.

Planes, child-care centres, shopping centres, department stores, satellites, hotels, power lines, gas pipelines and mobile phones: the Singapore Government owns all that and more in Australia yet this is barely mentioned in public debate.

Does anybody else out there feel a little uneasy about this phenomenon, especially given the secretive, autocratic and undemocratic tendencies of the Singapore Government?

Australian companies, let alone our Government, would never be allowed to buy equivalent assets in Singapore. And all this investment didn’t even give us the leverage to save Van Nguyen from the gallows.

Stephen Mayne was founder of Crikey.com and Kennett government spin doctor responsible for privatisation from 1992-1994.

Joe Studwell is the author of Asian Godfathers: Money and Power in Hong Kong and South-East Asia. What follows is an article he wrote for the latest edition of Newsweek magazine.

$$$$$$$$$$$$$$

Ties That Bind

Crony capitalism is stunting southeast Asia, says the author of a new book on the region’s godfathers.

By Joe Studwell
Newsweek International

July 23, 2007 issue – A couple of years ago I was fortunate enough to have dinner with Bob Zoellick, the wise American who now heads the World Bank. The conversation turned to Southeast Asia, a region Zoellick knows intimately, and about which I had recently agreed to write a book. In the wake of the 1997 financial crisis, Southeast Asia had been overtaken by China and India as the darlings of developmental economists and multinational business, yet I was optimistic. Zoellick listened quietly as I conjured up images of how the crisis could inspire a cathartic transition from crony capitalism to a market free of manipulation by bureaucrats and politicians. When I was finished, Zoellick looked across the table and said simply: “I am afraid that you may find that is not the case.”

Faulty Towers: Singapore’s growing economy has made the rich richer, but the working- and middle-classes are being left behind. Photo: Vivek Prakash / Reuters

He was right, as three years of research have revealed. The architecture of the Southeast Asian economy remains what it was 10 and 50 and 100 years ago. The domestic economies of Hong Kong, Singapore, Thailand, Malaysia, Indonesia and the Philippines are all still dominated by reclusive, enigmatic billionaires and their families, even if fewer of them rank among the richest people in the world. In 1996 no less than eight of the top two dozen billionaires on the Forbes global rich list were Southeast Asian; in 2006 only Hong Kong’s Li Ka-shing, with a net worth of US$18.8 billion, ranked in the top 24. Nonetheless, while some Southeast Asian tycoons have been overtaken by more entrepreneurial billionaires from other parts of the world, the region remains the global epicenter of rentier family business.

This sits heavily with ordinary citizens. To the extent Southeast Asia has succeeded, it has done so despite the influence of the tycoons. For 40 years the growth of gross domestic product and the creation of jobs in the region have moved in lock step with the expansion of exports, produced either directly by multinational corporations or under contract by small-scale local manufacturers. The billionaires avoid export manufacturing and its requirement for global competitiveness. Instead they prosper from concessions, monopolies and cartels in local service economies that define things like port handling, real estate, telecommunications and gaming.

A decade after the Asian crisis, Southeast Asia’s billionaires remain in the ascendancy because promised deregulation has never bitten. Even Hong Kong— lauded by the Heritage Foundation as the world’s freest economy (de facto cartels affect the port to supermarkets to electricity to cement) —has failed to pass the kind of antimonopoly statutes that are a central pillar of developed economies around the world. There has been no substantive progress on creating a common free market in services for the members of the Association of Southeast Asian Nations, despite relentless rhetoric. ASEAN is a toothless tiger, with no mechanism for enforcement of rulings, in a jungle of petty vested interests. Unlike the European Union, there are no regional or global brand-name corporations with the capacity to originate new services and technologies. There are simply local billionaires, lionized by domestic media, but running businesses whose productivity is regularly shown by economists to lag both that of Southeast Asian manufacturing and global enterprise in general. Why else, as once example, would container-handling charges at Hong Kong’s port be more than twice those in Germany?

Despite now bullish stock markets in the region, the billionaires—with their lousy corporate governance and manipulation of local banks to provide cheap and easy alternative sources of credit—also have contributed to the worst long-term emerging-market-equity performance in the world. From 1993—when the first significant international portfolio investments came into Southeast Asian bourses—to the end of 2006, total dollar returns with dividends reinvested in Thailand and the Philippines were actually negative. Returns in Indonesia and Malaysia were worse than leaving money in a London bank account. Singapore produced less than half the gain of the London or New York markets, with which only Hong Kong was comparable. It is a brave investor who thinks long-term equity returns will improve in the absence of structural economic change.

For working- and middle-class Asians, the past 10 years are mainly defined by rising and palpable inequality. The two wealthy city-states, Hong Kong and Singapore, today boast inequality as measured by the international Gini benchmark that is on par with urban Argentina. Postcrisis, the proportion of people in the Philippines, Thailand and Indonesia living on less than the World Bank’s $2-a-day measure of poverty and near poverty is greater than in Latin America. Today, it seems all too possible that the region’s coddled political and economic elites will allow their states to slide into a Latin American morass, as they continue to live high on the hog while the dreams of ordinary people go down the tubes.

Colonialism is partly to blame for this state of affairs, and for the whole tycoon system, though not entirely. In Thailand, which was never formally colonized, kings were employing Persians and Chinese to operate trading monopolies and tax farms from the 16th century. In Indonesia, Chinese entrepreneurs also entered into monopoly management arrangements with Javanese aristocrats before the arrival of Europeans.

Typically, there was a racial division of labor in which locals were political entrepreneurs focused on maintaining political power against indigenous rivals and, later, in partnership with Western colonists. Outsiders, often Chinese immigrants, were the economic entrepreneurs. So in Indonesia, the Dutch gave key ethnic Chinese traders both monopolies and pseudomilitary titles: majoor, kapitein, luitenant. The Spaniards who controlled the Philippines until 1898 named the top Chinese trader the gobernadorcillo de los sangleyes—the governor of the businessmen. In Malaya, the British and local royals sold trading, mining and other licenses to Chinese and Indian immigrants while encouraging rural indigenes to stick to farming.

When independence came, in the 1940s and 1950s, the region’s new leaders built on a system in which politics rules the economy. In Thailand, military leaders demanded substantial equity positions and a board presence in ethnic Chinese-run companies; the Malay political elite made its financial expectations of Chinese businessmen very clear, in what became known locally as “the bargain.” While the Thai and Malay elites stuck with established Chinese trader families, the two great Southeast Asian dictators of the postwar era—Suharto in Indonesia and Ferdinand Marcos in the Philippines—turned to unknown small-timers of whose absolute loyalty they could be sure. They were men like Liem Sioe Liong, a trader who in a few years became Indonesia’s top tycoon, and Lucio Tan, a man who once worked as a janitor but ended up as a Marcos billionaire.

To this day, there are precious few Southeast Asian tycoons whose wealth is not rooted in some form of state-sanctioned monopoly. (The exceptions are a couple of lesser Hong Kong billionaires, Patrick Wang of micromotor maker Johnson Electric and Michael Ying of clothing business Esprit, whose money was made in recent years in manufacturing in mainland China.) Soft-commodity monopolies for consumer items like sugar and flour produced early cash flows for Indonesia’s Liem and Malaysia’s Robert Kuok. Gaming licenses primed Stanley Ho in Macau and Lim Goh Tong, Ananda Krishnan and Vincent Tan in Malaysia, and lumber concessions made Mohamad (Bob) Hasan, Prajogo Pangestu and Eka Tjipta Widjaya in Indonesia.

In Hong Kong and Singapore, real estate became an effective cartel because of the way British colonial regimes structured the land market—selling off “crown land” in large lots that created a barrier to entry for all but a few big players. In the 1990s land packages in Hong Kong were commanding prices of about US$1 billion. The city-states also restricted access to their banking markets, creating other huge rents for local players; the biggest of all went to the institution that is now known as HSBC.

After access to concessions, access to capital was the second prerequisite of Southeast Asian tycoons. Elsewhere in the region, tycoons used their political influence to secure credit lines from state banks or opened their own institutions, which served as private piggy banks. The Philippines has lurched from one banking crisis to the next for almost a century, some based around state banks and others around private banks set up by tycoons. The country has never recovered from the financial-sector meltdown in the mid-1980s, when Marcos went into exile.

Across Southeast Asia the impact of the 1997 crisis followed the degree of corruption in the banking systems of Indonesia, Thailand, Malaysia, Singapore and Hong Kong. The Indonesian case was extraordinary. By 1997 every Indonesian tycoon had his own financial institution, and most banks had more than half their loans made to businesses run by the controlling families, ignoring the legal maximum of 20 percent. Liem’s Bank Central Asia, the biggest in the country, was owed 60 percent of its loan portfolio by other Liem companies.

In the wake of the crisis, there was some banking consolidation. Indonesia now has 130 banks, compared with 240 in 1997. Many banks were nationalized. Unfortunately, corrupt governments have an even worse record of managing credit allocation than tycoon-controlled financial institutions. It was notable that the Indonesian billionaire named by Forbes as the country’s richest individual in 2006—timber to real-estate tycoon Sukanto Tanoto, worth an estimated $2.8 billion—was listed by state bank Mandiri the same year as one of its six biggest delinquent borrowers.

Those Southeast Asian banks that have been reprivatized have often gone back to the billionaire fraternity; Liem’s BCA, for instance, is now controlled by the Hartono tobacco dynasty. Almost no bank in the region is widely held. The obvious exception, HSBC, whose terms of incorporation never allowed any shareholder to own more than 1 percent of its equity, is the only financial institution (and almost the only company) to have broken out to become a global enterprise.

After the financial crisis in Southeast Asia, in state after state, taxpayers picked up the tab, tycoons picked up the pieces and life went on as before. The lesson of the past decade has been that the relationship between political and economic elites in Southeast Asia is more enduring than almost anyone imagined.

Malaysia, which imposed capital controls and raised a finger to the International Monetary Fund as the crisis spread, dealt with its fallout in traditional fashion. The businesses of Halim Saad and Tajudin Ramli, the leading bumiputra (or indigenous) tycoons with close links to the ruling United Malays National Organization, were bailed out with injections of government money and state share purchases. Ananda Krishnan, the Tamil Sri Lankan billionaire and Mahathir confidant with an empire including telecoms and broadcasting, was shored up when state oil company Petronas bought out his interest in the vast Kuala Lumpur City Centre and Twin Towers real-estate development. Most telling was the fact that after the crisis, UMNO began to set up new tycoons on the old model. Within a few years, tycoon-of-the-moment Syed Mokhtar al-Bukhary, a former rice and cattle trader, built a vast conglomerate based in power generation, the operation of Port of Tanjung Pelepas, mining, plantations and hotels through government concessions and the provision of state financing.

Throughout the region, businessmen have been pushing deeper into politics, and Thaksin Shinawatra took this trend to its logical conclusion in Thailand. Backed by other key tycoon families—such as the Chearavanonts of CP Group and the Sophonpanichs, who control Bangkok Bank—he formed a political party and won election as prime minister. As had happened long before in the Philippines, the businessmen overran the political system, blurring the traditional distinction between political and economic elites.

The Thaksin adventure was doomed, however, and not just because middle-class Bangkok opinion was against him. Though Thaksin brought representatives of tycoon families like the Chearavanonts into his cabinet, his fellow tycoons became ever more livid that—in their view—all the spoils of power appeared to go to Thaksin. The prime minister’s telecoms and media business boomed (far faster than the Chearavanonts’), and by the fall of 2006, when Thaksin was pushed out in a coup, the other plutocrats were delighted. Today, Thaksin is in exile and buying an English soccer club; Thailand is again ruled by a military junta, and Thaksin’s peers are back at work, sailing in familiar political winds.

Almost none of the big players was ruined by the financial crisis in Malaysia, Thailand or the Philippines, and so it was in Indonesia, despite the fall of Suharto. The old man’s closest confidant and golfing buddy, Hasan, was made an example of with a conviction for fraud; he served a couple of years in a special and commodious prison cell. Despite a $56 billion write-off by the Indonesian Bank Restructuring Agency, most of which was required to bail out tycoon banks that engaged in illegal lending practices, most billionaires were able to hold on to the bulk of their assets.

Many prominent figures, nervous that they were not quite safe in Jakarta, decamped to Singapore and ran their operations from there. Sjamsul Nursalim, who repaid only about 10 percent of the money he borrowed from IBRA, is today focusing on large and growing businesses in Singapore and China. The most extraordinary escape story was that of the Widjaya family, which crawled out from under a cumulative debt of $13.9 billion owed by their Asia Pulp and Paper business and its subsidiaries. The Widjayas forced almost all their creditors to take a haircut, bought back bonds they issued for pennies on the dollar, survived the attempted intervention of senior European and American politicians with the government in Jakarta and faced down legal suits from Singapore to the United States. The family filed successful suits in Indonesia that declared some of its bond issues to have been illegal under local law and therefore not subject to repayment. The Widjayas, who were responsible for the biggest debt default in Asian history, are today probably richer than ever.

So where do these shenanigans leave Southeast Asia? It is easily forgotten that 150 years after the modern globalization era began, there is still only one significant Asian country that has made the transition all the way from backwardness to developed-nation status: Japan, and that was a century ago. We are not so good at learning the lessons of development as we think, and Southeast Asia richly illustrates the point.

In the absence of a deregulated common market, ASEAN’s intraregional trade is currently 20 percent of its total, compared with more than 50 percent in the European Union. Banking systems remain bloated by the region’s high savings rate but dysfunctional in their lending practices. Domestic economies are still concession-based, and corporate governance leaves much to be desired. Perhaps more than anything, what stands out in a review of Southeast Asia 10 years after the crisis is the contrast with South Korea and Taiwan, which is starker than it has ever been in the postcolonial period. Where Southeast Asian states stuck with modified colonial rentier systems after the second world war, South Korea and Taiwan took a different course. They successfully implemented land reform—in stark contrast to countries like the Philippines, where political elites have ensured the continuance of a landed ascendancy—and thereby ensured a bottom-up development process. Their governments made a commitment to social equity, reflected in far lower levels of inequality than are present in Southeast Asia, and the existence of independent organized labor. And when South Korea and Taiwan backed leading family businesses—as all developing states are wont to do—they supported local manufacturers rather than cosmopolitan trading elites.

Most obviously, it is clear today that South Korea and Taiwan take political systems seriously as drivers of development. In 1997, Kim Dae Jung, a longtime democracy and human-rights activist, was elected South Korean president and set in motion the most effective reform process to have occurred in the main crisis countries. Reporting and compliance requirements in the Seoul stock market are now stricter than in Southeast Asia, and the judiciary has shown far greater independence and resolve in pursuing those whose actions contributed to the crisis. The families behind Korea’s chaebol are today much weaker than their peers in Southeast Asia.

When the colonial era closed at the end of the second world war, South Korea and Taiwan were just as impoverished as the new nations of Southeast Asia: indeed, South Korea was much poorer than the Philippines. Today, with GDP per capita of about US$19,000 in South Korea and US$15,000 in Taiwan, those countries are three to four times richer than Malaysia and 10 to 12 times richer than Indonesia and the Philippines. The difference is political choices that in one part of Asia are creating free societies and globally competitive companies and in another sustain a superannuated economic aristocracy.

Scrutinizing Singapore, Commentary, Wall Street Journal
by Garry Rodan
June 21, 2007

Singapore’s state-owned investment companies — Temasek and the Government of Singapore Investment Corporation (GIC) — have long been information black holes for outsiders. But that hasn’t stopped many governments, including those in China and Malaysia, from copying the Singaporean model. As these funds expand in size and scope, they may want to pay close attention to a lesson that Singapore is learning: You can’t export opacity even if you can maintain it at home.

Take the experience of Temasek, which for over three decades has acted as a holding company for Singapore’s state-owned companies. But as it expanded, Temasek started to invest heavily in neighboring countries, such as Indonesia and Malaysia. This process gathered momentum following the 1997-98 Asian financial crisis when there were bargains to be had in the region — often involving politically sensitive sectors such as telecommunications and finance, hitherto dominated by locals. However, until recently, poorly developed governance regimes in such countries meant little scrutiny of these investments.

No more. Last month, Indonesia’s Business Competition Supervisory Commission declared it had uncovered prima facie evidence of monopoly practices by Temasek in the telecom industry. Temasek owns 56% of the SingTel Group, which in turn holds a 35% stake in Telkomsel, an Indonesian cellular telecommunications company. Singapore Technologies Telemedia, wholly owned by Temasek, also has a 41% share in Indosat. Together, Telekomsel and Indosat account for around 80% of the GSM cellular phone market in Indonesia.

Commission chairman Muhammad Iqbal says the watchdog has already discovered “signs of a lack of competition between Telkomsel and Indosat,” including comparable prices for mobile phone products. The University of Indonesia’s Institute for Economic and Social Research reported findings in late May suggesting price fixing between Telkomsel and Indosat. Shortly afterward, the Post and Telecommunications Directorate General announced its own investigation. Responding to the announcement by Indonesian authorities earlier this month that the probe into Temasek would now enter an advanced stage — meaning a hearing and three months’ further investigation — Temasek’s lawyer, Todung Mulya Lubis, asserted that the “claims and complaint filed against Temasek are totally without merit.”

Temasek is not accustomed at home to critical attention by university research centers, let alone such work being followed up by regulatory authorities. Not only are Singapore universities less inclined to probe the inner workings of state companies, but regulation of anti-competitive practices is a work in progress in the city-state. The Competition Act didn’t come into effect until 2005, following the signing of the U.S.-Singapore Free Trade Agreement and American persistence on competition and transparency issues aimed squarely at monopolies and cartels.

Then there’s Temasek’s January 2006 deal with Shin Corp. — the family company of Thailand’s former Prime Minister Thaksin Shinawatra — which by most accounts has been a disaster. In addition to a current investigation by Thai authorities into alleged foreign investment law violations that Temasek rejects, the deal precipitated widespread anti-Temasek and anti-Singapore street protests in Thailand, soured relations between the two countries and prompted the post-Thaksin junta to announce that it would seek to regain control from Temasek of ShinSat’s satellites, which it regards as having national security implications. On top of that, the deal represents a paper loss of around $2 billion in the wake of the nosedive in Shin Corp. share prices following the coup. It remains to be seen whether Temasek can ride through the political and regulatory storms in Thailand to return a profit in the long term.

These international episodes are starting to succeed, at least a little, where domestic political pressures have failed in enhancing transparency. In 2004, Temasek voluntarily produced its first annual report since it was incorporated in 1974, and has continued doing so since. The International Monetary Fund applauded this improvement, but also called for the Singaporean government to provide more information about the activities of Temasek and GIC, whose assets and liabilities are audited but reported only to the President and the Ministry of Finance. GIC Chairman Minister Mentor Lee Kuan Yew has repeatedly scotched ideas to detail publicly the assets and financial returns of the GIC — established in 1981 to invest Singapore’s foreign exchange reserves abroad. Doing so, he’s said, is not in the national interest. The standard reply prescribed for Temasek officials in response to questions about government involvement in business is: “The Singapore government, as a shareholder, is not involved in our investment decisions, much less in the businesses of our portfolio companies.”

Behind the highly selective concessions to greater transparency reform lies a fundamental issue with wide implications, not least for what we can expect of China’s new investment fund, reported to be many times larger than Temasek. While the Singapore government can be pragmatic in providing information where it sees economic benefits, it rejects the notion that Singaporeans have intrinsic rights to detailed information about how public money is invested. Transparency to improve the economy is one thing. Transparency grounded in notions of Singaporeans’ right to know and as a way of holding political elites and those acting under their administration to account is another.

Yet the value of information that does get released on economic grounds will remain limited without other domestic institutional changes rooted in respect for the public’s right to know. In the absence of strong and independent domestic media, well-resourced civil society watchdog groups and opposition parties with a strong presence in parliament, there is no capacity by the public to scrutinize official information, let alone the chance of exerting pressure to enforce the release of further information than authorities originally intended.

Without mutually reinforcing institutions of economic and political transparency at home, then, there is a serious limit to what governance regimes abroad can achieve in opening up state-owned investment funds. Therefore, while China’s new fund will find that global expansion comes with new information pressures, this might only steel the resolve of Chinese authorities to keep domestic transparency reforms within tight limits. Certainly that is the Singapore experience thus far.

Mr. Rodan is director of the Asia Research Centre and professor of politics and international studies at Murdoch University in Perth, Australia.

############

The Singapore Model, Wall Street Journal
June 27, 2007

In “Scrutinizing Singapore” (oped page, June 21), Garry Rodan condemns Singapore’s model of state-owned companies as “information black holes.”

Mr. Rodan criticizes the investments in Indosat and Shin Corp, and claims that international regulatory scrutiny of them has put pressure on Temasek Holdings to be more open. But these are commercial transactions, like all investments by Temasek Holdings and its subsidiaries, made after weighing the risk-return trade-offs, in compliance with the laws of the host countries and the disclosure requirements of the relevant stock exchanges. Temasek Holdings itself publishes an annual review of its performance, as Mr. Rodan admitted, maintains AAA/Aaa ratings from credit rating agencies like Standard & Poor’s and Moody’s, and has issued an international bond. It did not do so by being inefficient and non-transparent.

As for funds managed by the Government of Singapore Investment Corporation (GIC), it is not in Singapore’s interest to publish the details or reveal their size, as this would make it easier for would-be currency speculators to attack the Singapore dollar. However, GIC has published its average annual return over 25 years — 8.2% in Singapore dollars or 5.3% in real terms (discounting for G3 inflation), a creditable performance by any standard.

More fundamentally, Mr. Rodan argues that information released on economic grounds is of limited value, and that Singapore needs independent media, strong civil society watchdog groups and opposition parties to hold the government accountable, as does China. How Singapore is governed is for Singaporeans to decide. Our model has consistently delivered results, and been repeatedly endorsed by Singapore voters, to whom the government is fully accountable. Each country is different and has to work out institutions adapted to its own circumstances and needs. Singapore has found successful solutions for itself, and so must China. Mr. Rodan’s ill-founded criticisms of the Singapore model will not cause China to develop one more to his liking.

Chen Hwai Liang
Press Secretary to the
Prime Minister
Singapore

Mr. Rodan’s right to express his opinion should not be at the expense of accuracy and completeness, specifically his insinuations that ST Telemedia bought Indosat shares at a bargain price during the Asian financial crisis, and Indosat and Telkomsel’s combined market share represents evidence of monopolistic practices by their respective shareholders. As a company that holds itself to the highest standard of business ethics and integrity, we take such fallacious statements seriously and our clarifications are as follows:

The Indosat divestment happened in 2002 amidst a bleak economic outlook and low investor confidence in Indonesia. Indosat was faced with heavy debt and mediocre credit rating with restricted fund raising capability. Investor confidence was worsened by the Bali bombing in October 2002. Despite this, ST Telemedia continued to demonstrate confidence in the Indonesian economy. Our Indosat acquisition, which took place under the close scrutiny of Indonesia’s Secretary-General of the Ministry of Finance, the Director-General of the Ministry of Posts and Telecommunications, and representatives of the International Monetary Fund and World Bank, was the largest investment in Indonesia since the Asian financial crisis. The acquisition was approved by the relevant government authorities, including the Minister for Law and Human Rights, and the Indonesian People’s Representative Council (DPR), and Indosat’s shareholders (including the Indonesian government) at its EGM. ST Telemedia paid more than 50% premium over the market price at that time. In the immediate 6-month period following the divestment, Indosat’s share price plunged and our purchase price of 12,950 rupiah per share was not attained until almost 12 months later.

ST Telemedia and SingTel are separate companies. Although Temasek is a shareholder of the two companies, it does not direct nor involve themselves in the business or operational decisions of ST Telemedia or Indosat. ST Telemedia has our own management team and Board members, of which seven out of nine are independent Board members who are highly respected individuals from the international business community. They include Sir Michael Perry, Unilever’s former CEO and Chairman and UK Centrica’s Chairman; Justin Lilley, a prominent U.S. lawyer; and Vincent Perez, a businessman and former cabinet minister in the Philippines. None of ST Telemedia’s board of directors and management are directors or employees of SingTel, Telkom or Telkomsel.

StarHub, an ST Telemedia company, and SingTel compete fiercely and publicly on many fronts in the Singapore market. The two companies were also embroiled in numerous disputes and litigations on issues such as network testing support, interconnection and pay TV cabling.

Indosat and Telkomsel are separate companies. The Indonesian market is increasingly competitive with the entry of numerous new operators. ST Telemedia is a firm advocate of open competition and good corporate governance. Indosat has its own board of commissioners and board of directors who are responsible and accountable to all its shareholders.

Mr. Rodan failed to point out that publicly listed SingTel owns 35% of Telkomsel and the majority shares of 65% are held by publicly listed Telkom, which is in turn majority held by the Indonesian government. It is therefore inconceivable that the largest shareholder of Telkomsel, ie. Telkom, would abdicate its responsibilities by allowing Telkomsel to violate the regulations on fair competition.

Asia Mobile Holdings (AMH) owns about 40% of Indosat shares. AMH is held 75% by ST Telemedia and 25% by Qatar Telecom, one of the largest telecom operators in the Middle East. The remaining 60% of Indosat shares are held by the Indonesian government (with about 14%) and retail and global institutional investors (with about 46%). As a company that operates in Indonesia and is listed on the Jakarta, Surabaya and New York Stock Exchanges, Indosat must comply with Indonesia’s company laws and the exchanges’ strict regulations, including corporate governance and transparency, especially with regards to minority shareholders rights. The management of Indosat’s operation is through the Board of Commissioners and the Board of Directors. ST Telemedia is not involved in Indosat’s operational matters. Indosat’s regulatory obligations and board compositions provide sufficient checks and controls to ensure that the company adheres to strict corporate governance.

Thus, the fact that the two telecoms companies’ combined mobile market share of around 80% is an unfounded correlation to Indonesia’s Business Competition Supervisory Commission (KPPU) allegation, as Indosat’s internal and external safeguards would not allow collusive activities, including price fixing and monopoly of the GSM market, to occur with Telkomsel.

Melinda Tan
Director, Corporate Communications
Singapore Technologies Telemedia
Singapore

Lion without teeth, The Nation, 2 July 2007

Singapore is brilliant at self-promotion, says an Australian analyst, but it is no financial dynamo. Much of the world has been deluded by its hollow roars of success

Singapore, the modern city-state known for its authoritarian ways and conservative government, has a reputation for functional efficiency and capitalist success.

The smallest member of Asean geographically is often touted as one of Asia’s great success stories – a gleaming city that emerged from the tropical swamps under a strict but wise autocrat, Lee Kuan Yew.

But a fascinating new book by Australian Rodney King looks deeper into the “the Singapore Miracle” and reveals that a lot of the city’s supposed successes are in fact hot air.

Reports of Singapore being a dynamic commercial melting pot are, King says, simply the oft-repeated claims of a government that tolerates little dissent, and city leaders who may actually have stifled the sort of entrepreneurial dynamism you get in places such as Hong Kong, Shanghai, Taiwan and maybe even Bangkok.

King is a Perth journalist who lived in Singapore for a number of years and worked briefly at the Straits Times.

“The Singapore Miracle – Myth and Reality” casts doubt on the city-state’s claims of cutting-edge efficiency, global competitiveness, economic freedom and transparency. Most Singaporeans are not as affluent as their government makes out, King says in his extensively documented, 500-page tome.

“Books about Singapore usually praise its achievements or criticise its authoritarian rule,” he writes. “But few ever probe its widely publicised claims that it is a brilliant success that other countries should follow.”

King argues that Singapore’s workforce productivity is often mediocre and well below that of the West and Asian economies such as Hong Kong.

“The country also displays endemic inefficiencies at both macro and micro-economic levels. The performance of the construction, financial and service sectors is second-rate, while Singapore Airlines does not deserve the top rankings it receives.”

Singapore, he says, has “a dependent and underdeveloped economy”. Multinational companies and state enterprises predominate, and the economy has “low entrepreneurial and innovative capacities and an under-educated workforce”.

The city-state’s supposed affluence is also largely a myth.

“About 30 per cent of the population still lives in poverty by Western living standards,” he says. And Singapore’s Housing Development Board, Central Provident Fund and state-run health schemes have severe shortcomings.

What Singapore has been good at, he says, is marketing itself.

“Singapore has brilliantly sold itself to the world as an amazing success story to attract foreign investment and talent. It’s managed to get most Western think-tanks and ratings agencies to give it top scores for such things as competitiveness, transparency, economic freedom, etc.

“These bodies reflect the interests of foreign capital and their methodologies are shoddy and incompetent at times. And the statistics they are fed by the Singaporean authorities are often dubious and designed to put Singapore in the best light.

“To sell itself to the world Singapore has also denigrated and patronised its lesser-developed neighbours.”

Singapore was hardly an economic backwater when Lee Kuan Yew took power in 1959, says King, who has no special regard for the premier, who held office through his People’s Action Party (PAP) for 31 years. Lee is now known as a “Minister mentor” and elder statesman.

“Lee is always carefully listened to, and rather too politely … his views and lectures often receive reverential attention from opinion lenders, American think-tank experts and others who often have little direct first-hand knowledge of Singapore.”

In the early to mid-’60s, Singapore had one of the highest living standards in Asia, with one of the best-educated and hardest-working populations. Its strategic location and magnificent harbour – with extensive British-built shipyard facilities – alongside one of the world’s busiest sea-lanes, meant that it became a natural transport hub. And these features were a great asset for industrialisation.

The strategies Lee used to develop Singapore were an open-door policy to foreign capital and export orientation to tap into global trade. They helped the city-state enjoy double-digit growth from the ’60s to the ’80s.

But the Lion City became heavily dependent on foreign capital while state enterprises focused on infrastructure and “nation-building concerns”.

Entrepreneurial and innovative capacities have suffered because of a lack of domestic competition and the predominance of state bodies. Public servants running state boards often have little experience of the private sector “and no idea how to run a business”, King and other analysts say.

“The local private sector, normally the seedbed of innovation in most market economies, is stunted and starved of venture capital,” King writes. “The country’s capacity for indigenous research and development and entrepreneurial and innovative endeavours remains limited.

“Heavy state control of the economy is exercised through an extensive layer of state enterprises. The state imposes this control through layers of red tape.

“The government also manages a big chunk of the people’s savings through forced savings … and owns 72 per cent of the city-state’s land. Moreover, the government controls the unions and most of the labour force. Equally mythical are Singapore’s claims to being transparent. Nothing could be more untrue. The operations of Singapore’s government and bureaucracy are swathed in secrecy.”

King counters claims of high home-ownership levels, saying 86 per cent of Singaporeans rent government flats from the Housing Development Board on 99-year leases.

The author is provocative but very thorough. Every aspect of life in the city-state is analysed in detail.

“Singapore’s flaws are hidden by the PAP state’s vigorous marketing campaign,” he says. And most local and foreign journalists “are usually too restricted or intimidated by government defamation laws and other penalties to challenge or refute” the “river of statistics” promoting Singapore’s achievements.

There is a wealth of statistical and anecdotal material in this book to counter the official lines – or lies. Economists and anyone with an interest in Singapore should take note. This book could change the way you view our industrious neighbour.

But, perhaps the saddest facet of King’s work is not what he’s written, but the fact that the people who most need to read his book may find it hard to get, if Singaporean bookshops refuse to stock it, as he expects.