What Asian economic integration needs
By MALMINDERJIT SINGH
THERE should be a greater institutional presence in Asia to facilitate economic integration in the region.
This was the key message that Barry Eichengreen delivered in his public lecture on Asian Economic Integration at the Monetary Authority of Singapore (MAS) yesterday.
Professor Eichengreen, the newly appointed MAS Term Professor in Economics and Finance, explained that a more elaborate institutional presence in Asia would help cement existing gains, widen geographical coverage as well as further deepen economic integration.
He highlighted that regional integration efforts thus far have contributed to the growth of economic activity and living standards. Prof Eichengreen explained, however, that while trade shares and intensity have increased in Asia, this has happened at differing rates in different sub-regions, with East Asia experiencing greater progress in this regard as compared to South and Central Asia.
Prof Eichengreen, who is also professor of economics and political science at the University of California, Berkeley, said that going forward, institutional building in Asia should be more systemic as opposed to the ad hoc and reactive approach currently used. He suggested six areas in which institutional presence could be strengthened in the region. Firstly, he suggested making the most of current international conventions such as those from the World Trade Organization (WTO) and the 1980 United Nations Convention on Contracts for the International Sale of Goods. This would be easy to harmonise since their designs were already done.
Prof Eichengreen said that Asia should also look to develop institutions to exploit sub-regional opportunities such as enhancing transport infrastructure, exploring new economic corridors and perhaps more bilateral and sub-regional free trade agreements (FTAs). He added that there should be more opportunities for sub-regional groupings like Asean and the South Asian Association for Regional Cooperation (SAARC) to connect, perhaps through annual summits or conventions.
Prof Eichengreen recommended introducing a compliance board, made up of business and academic members, to help monitor and assess what institutions are doing and urged Asean to consider such a set-up as it would improve transparency. Further, he called for the Asean Secretariat to be given more freedom in setting the agenda and suggested that current review processes in Asean be strengthened. He pointed out that these measures would help strengthen existing groups and that governments should even consider expanding the Asean + 3 grouping, with an eventual objective of a pan-regional institution in mind.
The lecture was organised by MAS and the National University of Singapore Department of Economics.
Sunday, April 4, 2010
S’pore unis see opportunities in India’s new education policy
S’pore unis see opportunities in India’s new education policy
They see a chance to increase their presence in a lucrative market
By MALMINDERJIT SINGH
INSTEAD of seeing India’s move to allow foreign universities to set up local campuses as a threat, Singapore’s universities and private education institutions are looking at it as an opportunity to expand their presence there.
The Indian Cabinet’s ratification of the Foreign Educational Institutions Bill, partially designed to arrest the outflow of Indian students, has been seen as potentially detrimental to Singapore’s higher education providers who see many Indian students.
They, however, remain optimistic and, in fact, see it as an opportunity to increase their presence in a lucrative market. The number of Indian students in higher education stands at 14 million currently, but sources say that the Indian government has targeted to raise this figure to 21 million by 2012.
The Singapore Management University (SMU), for one, is already looking for partnerships with Indian universities for postgraduate education in areas such as finance, wealth and healthcare management, Rajendra K Srivastava, provost and deputy president (academic affairs) at SMU, told BT.
“On the postgraduate front, India is very much on the radar of SMU for executive education, including specialised master’s programmes and customised training for professionals,” he said.
Others with pre-existing partnerships there may be looking to expand further.
Peter Pang, assistant vice-president, university & global relations at the National University of Singapore (NUS), pointed out that NUS has partnerships with several universities in India, including joint PhD programmes with the Indian Institute of Technology Mumbai, the Indian Institute of Technology Chennai {SEE CORRECTION 1 ABOVE}, and the Indian Institute of Technology Kanpur, as well as an NUS Overseas College in India.
“The foreign universities bill will open up even more opportunities for collaboration,” he said.
Raffles Education Corporation in Singapore, which already has seven education centres in various Indian cities through joint venture projects with Educomp Solutions, India’s largest education company, may also be on the lookout, although chairman and chief executive officer Chew Hua Seng preferred to comment broadly on this development. “The new law is timely to unleash India’s vast human resource potential to propel it forward economically”, he said. Local players, however, will have their work cut out for them because international players are getting in on the game, too.
New York-based Columbia University will be setting up an international centre for research and regional collaboration in Mumbai later this month, while the Graduate Management Admission Council (GMAC), which conducts the Graduate Management Aptitude Test (GMAT), has also announced plans to set up an office in India, its third globally after the United States and the UK.
But still, most remain buoyant about prospects because “the Indian market is big enough to accommodate multiple players”, said a Singapore Institute of Management {SEE CORRECTION 2 ABOVE} (SIM) spokesman.
“(Even though) with market liberalisation Indian students will have more choices, Singapore will still be attractive to international students who want an overseas education in a safe and vibrant multi-cultural environment, as well as one that offers attractive career opportunities in the future.”
The devil is in the details though. The fine print of the bill includes clauses that bar the foreign universities from repatriating profits and put conditions on them to shell out around 500 million rupees (S$15.3 million) upfront and make complete disclosure on their curriculum and faculties, reported India’s Financial Express.
Such clauses may influence Singapore-based institutions to enter the market through joint ventures and partnerships, rather than establishing a direct presence, and to be more cautious about expansion plans. “It is still too early to tell at our current stage of development,” reiterated the SIM spokesman. “We would like to remain focused on our mission, which is to provide good-quality education for adult learners in Singapore.”
But still no one doubts that India’s new bill will up the ante in the education business.
“India’s policy will spur us to be more competitive,” said Lalit Goel, dean of admissions and financial aid at the Nanyang Technological University (NTU). “NTU will continue to put in effort to attract talent . . . We are always looking for bright talent from all countries, including India, and due to the sheer volume of applicants from India, we do not believe that this will affect applications significantly.”
Prof Srivastava echoed the positive sentiments. “SMU has always been a popular destination for Indian students seeking higher education given our close proximity in the heart of Asia and the excellent connections we have with Indian businesses. I believe that going abroad for tertiary studies remains a very attractive option among Indian students for the global exposure and opportunity to know the region better.”
‘Going abroad for tertiary studies remains a very attractive option among Indian students for the global exposure and opportunity to know the region better.’ – Prof Srivastava
They see a chance to increase their presence in a lucrative market
By MALMINDERJIT SINGH
INSTEAD of seeing India’s move to allow foreign universities to set up local campuses as a threat, Singapore’s universities and private education institutions are looking at it as an opportunity to expand their presence there.
The Indian Cabinet’s ratification of the Foreign Educational Institutions Bill, partially designed to arrest the outflow of Indian students, has been seen as potentially detrimental to Singapore’s higher education providers who see many Indian students.
They, however, remain optimistic and, in fact, see it as an opportunity to increase their presence in a lucrative market. The number of Indian students in higher education stands at 14 million currently, but sources say that the Indian government has targeted to raise this figure to 21 million by 2012.
The Singapore Management University (SMU), for one, is already looking for partnerships with Indian universities for postgraduate education in areas such as finance, wealth and healthcare management, Rajendra K Srivastava, provost and deputy president (academic affairs) at SMU, told BT.
“On the postgraduate front, India is very much on the radar of SMU for executive education, including specialised master’s programmes and customised training for professionals,” he said.
Others with pre-existing partnerships there may be looking to expand further.
Peter Pang, assistant vice-president, university & global relations at the National University of Singapore (NUS), pointed out that NUS has partnerships with several universities in India, including joint PhD programmes with the Indian Institute of Technology Mumbai, the Indian Institute of Technology Chennai {SEE CORRECTION 1 ABOVE}, and the Indian Institute of Technology Kanpur, as well as an NUS Overseas College in India.
“The foreign universities bill will open up even more opportunities for collaboration,” he said.
Raffles Education Corporation in Singapore, which already has seven education centres in various Indian cities through joint venture projects with Educomp Solutions, India’s largest education company, may also be on the lookout, although chairman and chief executive officer Chew Hua Seng preferred to comment broadly on this development. “The new law is timely to unleash India’s vast human resource potential to propel it forward economically”, he said. Local players, however, will have their work cut out for them because international players are getting in on the game, too.
New York-based Columbia University will be setting up an international centre for research and regional collaboration in Mumbai later this month, while the Graduate Management Admission Council (GMAC), which conducts the Graduate Management Aptitude Test (GMAT), has also announced plans to set up an office in India, its third globally after the United States and the UK.
But still, most remain buoyant about prospects because “the Indian market is big enough to accommodate multiple players”, said a Singapore Institute of Management {SEE CORRECTION 2 ABOVE} (SIM) spokesman.
“(Even though) with market liberalisation Indian students will have more choices, Singapore will still be attractive to international students who want an overseas education in a safe and vibrant multi-cultural environment, as well as one that offers attractive career opportunities in the future.”
The devil is in the details though. The fine print of the bill includes clauses that bar the foreign universities from repatriating profits and put conditions on them to shell out around 500 million rupees (S$15.3 million) upfront and make complete disclosure on their curriculum and faculties, reported India’s Financial Express.
Such clauses may influence Singapore-based institutions to enter the market through joint ventures and partnerships, rather than establishing a direct presence, and to be more cautious about expansion plans. “It is still too early to tell at our current stage of development,” reiterated the SIM spokesman. “We would like to remain focused on our mission, which is to provide good-quality education for adult learners in Singapore.”
But still no one doubts that India’s new bill will up the ante in the education business.
“India’s policy will spur us to be more competitive,” said Lalit Goel, dean of admissions and financial aid at the Nanyang Technological University (NTU). “NTU will continue to put in effort to attract talent . . . We are always looking for bright talent from all countries, including India, and due to the sheer volume of applicants from India, we do not believe that this will affect applications significantly.”
Prof Srivastava echoed the positive sentiments. “SMU has always been a popular destination for Indian students seeking higher education given our close proximity in the heart of Asia and the excellent connections we have with Indian businesses. I believe that going abroad for tertiary studies remains a very attractive option among Indian students for the global exposure and opportunity to know the region better.”
‘Going abroad for tertiary studies remains a very attractive option among Indian students for the global exposure and opportunity to know the region better.’ – Prof Srivastava
CECA review may begin soon
CECA review may begin soon
It will address areas such as mutual recognition agreements
By MALMINDERJIT SINGH
[SINGAPORE] The review of Singapore’s Comprehensive Economic Cooperation Agreement (CECA) with India could be launched as soon next month, said India’s High Commissioner to Singapore, TCA Raghavan, at the sidelines of the Opportunities in Special Economic Zones (SEZ) Sector in India conference yesterday.
Mr Raghavan said that some preliminary work has already been done for a review of the CECA, and it will be formally launched when Minister for Trade Lim Hng Kiang visits India. He added that the review will take into account the changes in the overall trade scenario since the CECA was signed in 2005, which provides traders in Singapore more opportunities as they can now benefit from both the CECA and the Asean-India free trade agreement.
“I think the review will certainly address areas which both sides feel could do with more focus. One area is the MRAs – the Mutual Recognition Agreements. There has been some progress, and some things only mature over time. And the MRAs are a process which depends a lot on the professional organisations on both sides. I think there will be progress in those areas,” elaborated the high commissioner on the possibility of a new and improved CECA.
He also told reporters that the CECA review will be an ongoing dialogue with both countries’ trade ministers making bilateral visits. The review is expected to extend over several months and is expected to be completed substantially by the end of this year.
Singapore is the second largest investor in India, providing 9 per cent of India’s total foreign direct investment (FDI) flows. Mr Raghavan was confident that investment flows between both countries can grow out of the shadows of last year’s dampened global investment climate, and attributed this to India’s macroeconomic stability and a potentially high quality trade in investments agreement between India and Asean, which Singapore investors may find complementary to the CECA.
“One example is the very good turnout we’ve seen in this conference from both India and Singapore. From India, we have about 35 SEZ developers and officials participating, and even more so in terms of the local participation and the queries we have had. The High Commission can provide a platform and our intention is to make the platform as focused as possible, that is to look at the sectors and sub-sectors because the overall argument is now well made and well known – that is, the Indian economy is going to be a growth story over the next decade,” he said.
LB Singhal, director general of India’s Export Promotion Council for Export Oriented Units and SEZs (EPCES), said that there were 575 formal SEZ approvals in India at the end of 2009. Some 105 of these were already functioning and housing as many as 2,761 units, he said. He also pointed out that Singapore companies could play a role in these SEZs as developers or as individual units. In doing so, he highlighted that they stand to benefit through various tax exemptions, duty free goods and 100 per cent FDI through the automatic route, among other features.
Mr Lim said that Singapore companies have gained much experience from planning, developing and implementing SEZs in the region and could apply this expertise to the Indian case, notably in the areas of master planning and industrial development, and in establishing an efficient transport and logistics chain.
Mr Lim noted that although concerns surrounding land acquisition, resettlement and creation of employment need to be addressed and managed effectively, Singapore companies such as Ascendas have done well in India and have a lot to offer to SEZs there.
It will address areas such as mutual recognition agreements
By MALMINDERJIT SINGH
[SINGAPORE] The review of Singapore’s Comprehensive Economic Cooperation Agreement (CECA) with India could be launched as soon next month, said India’s High Commissioner to Singapore, TCA Raghavan, at the sidelines of the Opportunities in Special Economic Zones (SEZ) Sector in India conference yesterday.
Mr Raghavan said that some preliminary work has already been done for a review of the CECA, and it will be formally launched when Minister for Trade Lim Hng Kiang visits India. He added that the review will take into account the changes in the overall trade scenario since the CECA was signed in 2005, which provides traders in Singapore more opportunities as they can now benefit from both the CECA and the Asean-India free trade agreement.
“I think the review will certainly address areas which both sides feel could do with more focus. One area is the MRAs – the Mutual Recognition Agreements. There has been some progress, and some things only mature over time. And the MRAs are a process which depends a lot on the professional organisations on both sides. I think there will be progress in those areas,” elaborated the high commissioner on the possibility of a new and improved CECA.
He also told reporters that the CECA review will be an ongoing dialogue with both countries’ trade ministers making bilateral visits. The review is expected to extend over several months and is expected to be completed substantially by the end of this year.
Singapore is the second largest investor in India, providing 9 per cent of India’s total foreign direct investment (FDI) flows. Mr Raghavan was confident that investment flows between both countries can grow out of the shadows of last year’s dampened global investment climate, and attributed this to India’s macroeconomic stability and a potentially high quality trade in investments agreement between India and Asean, which Singapore investors may find complementary to the CECA.
“One example is the very good turnout we’ve seen in this conference from both India and Singapore. From India, we have about 35 SEZ developers and officials participating, and even more so in terms of the local participation and the queries we have had. The High Commission can provide a platform and our intention is to make the platform as focused as possible, that is to look at the sectors and sub-sectors because the overall argument is now well made and well known – that is, the Indian economy is going to be a growth story over the next decade,” he said.
LB Singhal, director general of India’s Export Promotion Council for Export Oriented Units and SEZs (EPCES), said that there were 575 formal SEZ approvals in India at the end of 2009. Some 105 of these were already functioning and housing as many as 2,761 units, he said. He also pointed out that Singapore companies could play a role in these SEZs as developers or as individual units. In doing so, he highlighted that they stand to benefit through various tax exemptions, duty free goods and 100 per cent FDI through the automatic route, among other features.
Mr Lim said that Singapore companies have gained much experience from planning, developing and implementing SEZs in the region and could apply this expertise to the Indian case, notably in the areas of master planning and industrial development, and in establishing an efficient transport and logistics chain.
Mr Lim noted that although concerns surrounding land acquisition, resettlement and creation of employment need to be addressed and managed effectively, Singapore companies such as Ascendas have done well in India and have a lot to offer to SEZs there.
Saturday, April 3, 2010
HSBC's customised trade finance for S'pore firms
HSBC's customised trade finance for S'pore firms
Bank may soon offer option for S'pore-India trade
By MALMINDERJIT SINGH
(SINGAPORE) Singapore companies looking to do business in India may soon look towards customised trade financing options available there, according to Puneet Chaddha, Hongkong and Shanghai Banking Corporation (HSBC)'s managing director and head of commercial banking, India.
Speaking to The Business Times, he explained that while HSBC's standard products are good to a point, custom-made options are necessary and thus the bank is putting together the proposition of developing country-specific financing products.
Quoting examples of the India-Bangladesh and the India-UAE customised trade financing packages currently available in India, Mr Chaddha added that we are likely to see the same appearing for India-Singapore trade.
Such a development is likely to improve documentation and processes standardisation between banks in Singapore and India. Mr Chaddha said this would allow Singapore companies doing business in India to gain better access to financing than before and they would save through lower financial costs and turnaround time.
The global economic recession has altered the trend of financing choices for businesses in India. According to Mr Chaddha, the involvement of banks was kept low in the pre-crisis environment as buyers and sellers trusted each other more with credit options. However, as commercial trust becomes more fragile with the onslaught of the recession, more companies have turned to banks and their instruments, such as letters of credit, as credit enhancers.
Currently, Mr Chaddha explained, both small and medium-sized enterprises (SMEs) and large multinational corporations (MNCs) can draw from a host of financing structures and trade products that the banks in India provide. He pointed out that MNCs may also raise financing domestically or off-shore, depending on which is the cheaper market to borrow from.
Singapore is India's 14th largest import market and fourth largest export destination, as well as being the second largest provider of foreign direct investment into India. While Singapore's exports to India have largely been concentrated in mineral oils, electrical and medical equipment and organic chemicals, recent announcements by the Indian government to liberalise certain sectors of the economy, particularly financial services, higher education and defence, could signal more opportunities for businesses in Singapore.
'I see a greater sense of comfort among Singapore companies in doing business in India now,' Mr Chaddha said. 'As a result of the recent announcements by the Indian Finance Minister (on offering more banking licences), we will see more Singapore companies setting up operations in India, and particularly in the financial services industry,' he added.
HSBC, according to Mr Chaddha, will be following this segment of leading international business very closely as it looks to focus on facilitating cross-border trade. As such, he said the bank is clear that it will look towards penetrating the market that the India-Singapore trade flows creates.
At the same time, he explains that HSBC will create a proposition that it would like to bring to its customers in this segment, so as to highlight the benefits they may enjoy in doing business with the bank. This, he says, represents a more scientific approach to bilateral trade that HSBC is looking to adopt as opposed to simply targeting a certain percentage share of the market and he is confident that this will be a successful strategy.
Mr Chaddha was in Singapore to speak at a session of the International Enterprise Singapore's advisory seminar series on 'Doing Business in India' yesterday.
Bank may soon offer option for S'pore-India trade
By MALMINDERJIT SINGH
(SINGAPORE) Singapore companies looking to do business in India may soon look towards customised trade financing options available there, according to Puneet Chaddha, Hongkong and Shanghai Banking Corporation (HSBC)'s managing director and head of commercial banking, India.
Speaking to The Business Times, he explained that while HSBC's standard products are good to a point, custom-made options are necessary and thus the bank is putting together the proposition of developing country-specific financing products.
Quoting examples of the India-Bangladesh and the India-UAE customised trade financing packages currently available in India, Mr Chaddha added that we are likely to see the same appearing for India-Singapore trade.
Such a development is likely to improve documentation and processes standardisation between banks in Singapore and India. Mr Chaddha said this would allow Singapore companies doing business in India to gain better access to financing than before and they would save through lower financial costs and turnaround time.
The global economic recession has altered the trend of financing choices for businesses in India. According to Mr Chaddha, the involvement of banks was kept low in the pre-crisis environment as buyers and sellers trusted each other more with credit options. However, as commercial trust becomes more fragile with the onslaught of the recession, more companies have turned to banks and their instruments, such as letters of credit, as credit enhancers.
Currently, Mr Chaddha explained, both small and medium-sized enterprises (SMEs) and large multinational corporations (MNCs) can draw from a host of financing structures and trade products that the banks in India provide. He pointed out that MNCs may also raise financing domestically or off-shore, depending on which is the cheaper market to borrow from.
Singapore is India's 14th largest import market and fourth largest export destination, as well as being the second largest provider of foreign direct investment into India. While Singapore's exports to India have largely been concentrated in mineral oils, electrical and medical equipment and organic chemicals, recent announcements by the Indian government to liberalise certain sectors of the economy, particularly financial services, higher education and defence, could signal more opportunities for businesses in Singapore.
'I see a greater sense of comfort among Singapore companies in doing business in India now,' Mr Chaddha said. 'As a result of the recent announcements by the Indian Finance Minister (on offering more banking licences), we will see more Singapore companies setting up operations in India, and particularly in the financial services industry,' he added.
HSBC, according to Mr Chaddha, will be following this segment of leading international business very closely as it looks to focus on facilitating cross-border trade. As such, he said the bank is clear that it will look towards penetrating the market that the India-Singapore trade flows creates.
At the same time, he explains that HSBC will create a proposition that it would like to bring to its customers in this segment, so as to highlight the benefits they may enjoy in doing business with the bank. This, he says, represents a more scientific approach to bilateral trade that HSBC is looking to adopt as opposed to simply targeting a certain percentage share of the market and he is confident that this will be a successful strategy.
Mr Chaddha was in Singapore to speak at a session of the International Enterprise Singapore's advisory seminar series on 'Doing Business in India' yesterday.
Expect a Bold Budget
Expect a Bold Budget
By Malminderjit Singh
In the run up to the Budget, to be unveiled by Finance Minister Tharman Shanmugaratnam this afternoon, the rumour mills have been working overtime on what might be in store. While analysts have expressed mixed views on the likely contents of the Budget, many would agree that expectations in this year of economic recovery are higher than usual.
There are signs to indicate that Budget 2010 will be bold, and will target some broad objectives, as well as some very specific ones. But the economic backdrop to the Budget, while better than last year, is by no means rosy. Although the government has raised its growth forecast to 4.5-6.5 per cent for this year, in reality there are still obstacles to steering the economy to a full recovery. As long as US unemployment figures remain grim and the debt crises afflicting Europe, as well as Dubai, continues to fester, any talk of full recovery is premature.
Clouding the picture even more are the growing asset bubbles in parts of Asia, coupled with high inflation levels in China and India - which could lead to policy tightening in this region and add to the slack in global demand. Given such uncertainties, yet another bold Budget may be necessary to help stimulate the domestic economy.
Moreover, with the General Elections possibly on the horizon later this year, the government may be unwilling to risk any decline in economic growth. This is another reason for it to lean towards an expansionary budget to boost job creation and output. We already have a foretaste of what is to come in the recommendations of the Economic Strategies Committee on Feb 1. It could be argued that the ESC recommendations did not produce as much excitement as expected. After all, the push for productivity and enterprise development, which the committee emphasised, has reappeared many a time over the decades and then fallen off the radar screen. However, the ESC's role was not to generate hype or excitement, but to come up with ways to achieve more sustainable and inclusive growth.
The excitement could be delivered through other means, including the Budget. If the ESC's framework was skeletal, then the Budget will look to add flesh and muscle. It could make the recommendations more concrete and help improve their mass acceptance. An expansionary Budget would be most conducive to measures aimed at restructuring the economy.
Expect Budget 2010 to also address social issues, albeit subtly. This is as good a time as any for the government to use the fiscal tools at its disposal to tackle rising socio-economic concerns. For instance, by incentivising companies to focus on worker productivity, the government would be able to begin the process of reducing Singapore's dependence on low-cost labour from overseas. It is no secret that the influx of foreign labour has been on the minds of many Singaporeans, and this is likely to be addressed in the Budget. There have also been calls for a minimum wage to help tackle the issues of depressed wages and rising income inequality.
If the government does introduce a minimum wage, or a derivative in some part, then it could help improve the standards of living of a significant proportion of Singaporeans. Thus, while previous Budgets have been geared mainly towards economic concerns, do not be surprised if the measures in Budget 2010 are also focused on social policies.
Of course, we should not expect this year's budget to dig as deep into the coffers as did last year's $20.5 billion Resilience Package. After all, the Resilience Package was an urgent solution to help the economy avert the worst effects of the recession - which it did successfully. This time around, the Budget is likely to be less extraordinarily generous. But it could contain measures that have a profound long term impact in terms of guiding the direction of Singapore's future economic development
By Malminderjit Singh
In the run up to the Budget, to be unveiled by Finance Minister Tharman Shanmugaratnam this afternoon, the rumour mills have been working overtime on what might be in store. While analysts have expressed mixed views on the likely contents of the Budget, many would agree that expectations in this year of economic recovery are higher than usual.
There are signs to indicate that Budget 2010 will be bold, and will target some broad objectives, as well as some very specific ones. But the economic backdrop to the Budget, while better than last year, is by no means rosy. Although the government has raised its growth forecast to 4.5-6.5 per cent for this year, in reality there are still obstacles to steering the economy to a full recovery. As long as US unemployment figures remain grim and the debt crises afflicting Europe, as well as Dubai, continues to fester, any talk of full recovery is premature.
Clouding the picture even more are the growing asset bubbles in parts of Asia, coupled with high inflation levels in China and India - which could lead to policy tightening in this region and add to the slack in global demand. Given such uncertainties, yet another bold Budget may be necessary to help stimulate the domestic economy.
Moreover, with the General Elections possibly on the horizon later this year, the government may be unwilling to risk any decline in economic growth. This is another reason for it to lean towards an expansionary budget to boost job creation and output. We already have a foretaste of what is to come in the recommendations of the Economic Strategies Committee on Feb 1. It could be argued that the ESC recommendations did not produce as much excitement as expected. After all, the push for productivity and enterprise development, which the committee emphasised, has reappeared many a time over the decades and then fallen off the radar screen. However, the ESC's role was not to generate hype or excitement, but to come up with ways to achieve more sustainable and inclusive growth.
The excitement could be delivered through other means, including the Budget. If the ESC's framework was skeletal, then the Budget will look to add flesh and muscle. It could make the recommendations more concrete and help improve their mass acceptance. An expansionary Budget would be most conducive to measures aimed at restructuring the economy.
Expect Budget 2010 to also address social issues, albeit subtly. This is as good a time as any for the government to use the fiscal tools at its disposal to tackle rising socio-economic concerns. For instance, by incentivising companies to focus on worker productivity, the government would be able to begin the process of reducing Singapore's dependence on low-cost labour from overseas. It is no secret that the influx of foreign labour has been on the minds of many Singaporeans, and this is likely to be addressed in the Budget. There have also been calls for a minimum wage to help tackle the issues of depressed wages and rising income inequality.
If the government does introduce a minimum wage, or a derivative in some part, then it could help improve the standards of living of a significant proportion of Singaporeans. Thus, while previous Budgets have been geared mainly towards economic concerns, do not be surprised if the measures in Budget 2010 are also focused on social policies.
Of course, we should not expect this year's budget to dig as deep into the coffers as did last year's $20.5 billion Resilience Package. After all, the Resilience Package was an urgent solution to help the economy avert the worst effects of the recession - which it did successfully. This time around, the Budget is likely to be less extraordinarily generous. But it could contain measures that have a profound long term impact in terms of guiding the direction of Singapore's future economic development
Saturday, February 27, 2010
Buoyed by growth, India to cut deficit - February 27, 2010
Buoyed by growth, India to cut deficit - February 27, 2010
My article in the Business Times on the Indian Budget 2010.
My article in the Business Times on the Indian Budget 2010.
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