TR EMERITUS

The race to succeed British Prime Minister, Boris Johnson has become an international sensation, particularly in India. The reason is simple, the front runner of succeed Mr. Johnson, is the former Chancellor of the Exchequer, Mr. Rishi Sunak, who is of Indian descent. The news of Mr. Sunak’s success has gone set the Indian media on fire and his expected accent to the premiership of the UK is portrayed as “karma” for British rule of India. In a way, its good to see Mr. Sunak succeed. If you look at it from the Singapore perspective, the only question one can ask is “how is that nobody in the UK seems to care that Mr. Sunak comes from a ethnic minority, whilst in Singapore, despite 55-years of pledging to be “regardless of race or religion,” we’re still told that we are not ready for a Prime Minister from an ethnic minority.” The fact that Mr. Sunak’s rise has not raised an eye-brow speaks well for the UK. Its as if ethnic origins have become immaterial. The British Press has thus far not talked about a “First Indian Origin” Prime Minister in the same way that the American press talked about “First Black” President when Obama took power back in 2008. There’s much going in favour of Mr. Sunak. He’s highly presentable (he’s officially known as “Dishy Rishi” and was voted sexiest male politician by Daily Mirror readers) and articulate. He was praised for his handling of the Covid-19 relief. After three years of an incompetent fat slob, it would be nice to have someone presentable and vaguely competent in charge. There is, however, one major but unfocused minus point against Sunak. The minus point that everyone focused on was the fact that his wife. Ms. Akshata Murthy, daughter of Infosys co-founder, Mr. N.R Narayana Murthy, was registered as “non-domicile” in the UK and didn’t pay a penny to the exchequer on her very vast dividend income from Infosys shares. Being a “non-domicile” was not illegal but it didn’t look good. More importantly, it distracted everyone from the real issue – which is what exactly is the influence that Infosys plays in Mr. Sunak’s political career. Now, Mr. Sunak has admitted that he has received advice from his father-in-law and he’s admitted that his father-in-law is not easily impressed. This isn’t what you’d call anything abnormal in a family situation: [LINK] Then, in fairness to Mr. Narayana Murthy, he is one of the “good guys” in the capitalist story coming out of India. Mr. Murthy made his fortune in a sector of the Indian economy that functions at international standards (Intellect’s Design’s Managing Director, Arun Jain, once called it the sector that the Indian government stays out of). He isn’t “inherited” wealth nor did he use dubious letters of credit to swindle people. Mr. Murthy is a “hero” by anyone’s standards and if there is anyone you should take advice from, it is Mr. Murthy. Mr. Sunak is rightfully proud of what his in-laws have achieved and, in many ways, their success story is what “conservative” parties should proclaim: [LINK] However, while nobody expects Mr. Sunak not to have any contact with Mr. Murthy at all, what role is the well being of Infosys going to take in Mr. Sunak’s decision making. As benign as Mr. Murthy is, every political office holder in a democratic system needs to be clear about where their interests are. While nobody has yet to raise the question and nobody has yet to suggests that it has. Ms. Akshata Murthy merely owns shares and Mr. Murthy has officially left the running of Infosys in 2014. However, Mr. Murthy is still an influential figure in Infosys and when so much of the family wealth is tied up in a single company, one needs to make clear where the lines are drawn. This isn’t to suggests that Mr. Sunak or Infosys will do anything unethical but, in a day, and age of social media, one should be very clear about certain things. Let’s face it, the record of politicians being a bit too cozy with business isn’t stellar. America just had four years of a president who used the state to further his own business. While the Donald was loud about how he was only working for a single dollar a year, somehow the Trump International Hotel in Washington became the favorite haunt of international dignitaries and whenever he visited Mar-A-Lago, he could bill the state for the Secret Service accommodation. Believe it or not, he wasn’t the first politician who refused to sever ties with his business whilst in office. In the 1990s, the Italians had Silvio Berlusconi, who became the European role model for Thakshin Shinawatra a few years later. All these men never really made it clear where their business interest ended. Singapore has a different take on “conflict of interest.” For years, the head of the “Sovereign Wealth Fund” (which Temasek Holdings is in practice, even if it legally isn’t one), was married to the Prime Minister and the daughter-in-law of the highly influential first Prime Minister. On paper, there was no official conflict. Temasek Holdings have been shouting about how they are “independent” of the government. Then, there’s the fact that Temasek Holdings is owned by the State rather than the Lee family, you could say that there’s no issue here (even if Madam Ho’s salary was a state secret while her husband’s was out in the open). However, if you look at the way Singapore Inc has functioned, you’ll notice that the “big” Singapore companies have inevitably failed to grow beyond Singapore’s miniscule domestic market. The only exception would be SIA, which operates in a space where domestic protection is pointless and SingTel, which bought companies from elsewhere. How is it, for example, that laws get passed that seem to benefit the big players. One of the most prominent areas is in finance, where as Emanuel Daniel, publisher of the Asian Banking and Finance Journal pointed out – the regulator ensured that FinTech companies would be mere subcontractors to the banks instead of competing with the banks. Officially, there’s nothing wrong with our companies until they have to function outside the protected ecosystem of Singapore. Mr. Sunak has a chance to be something exciting for the UK. However, he needs to be clear as to where Infosys’s interest end and his begin. As long he does that he should be a decent enough amount of fresh air after the incompetent Johnson years.   Tang Li *Although I’ve been based mainly in Singapore for nearly two decades, I’ve had the privilege of being able meet people who have crossed borders and cultures. I’ve befriended ministers and ambassadors and worked on projects involving a former head of state. Yet, at the same time, I’ve had the privilege of befriending migrant labourers and former convicts. All of them have a story to tell. All of them add to the fabric of life. I hope to express the stories that inspire us to create life as it should be.      Read More →

A Straits Times (ST) story’s headline today - “MAS clocks net loss on the back of inflationary pressures” – may give the wrong impression and arouse undue alarm. The loss of MAS is not a matter of grave concern for the following reasons: 1.​ The loss came mainly from exchange translation losses. An exchange translation loss is a paper loss when you own foreign currency assets and that foreign currency depreciates against the Singapore dollar. By holding more than $400 billion of Official Foreign Reserves, MAS is constantly exposed to exchange rate fluctuations. The paper loss may disappear in future if the foreign currency appreciates against the Singapore dollar. Even if that does not happen, the return from the foreign currency assets will eventually cover the exchange losses. For example, this year, the MAS recorded a translation loss of $8.7 billion but that was offset by investment income and gains of $4 billion. As the MAS is expected to continue to make investment income and gains, these will usually cover the translation loss over the next few years. Compared to MAS, GIC and Temasek have greater ability to generate investment income and gains because they invest in stocks, property and private equity, which MAS does not. In the case of Temasek, which reported good investment results recently, the investment income and gains were more than exchange translation losses. And the same applies to GIC’s investment performance. 2.​ It is the role of the MAS trading team to manage the exchange rate fluctuations and they have been generally successful. However, in the last few months, the situation changed and there are two events that overcame the MAS trading team. Firstly, MAS allowed the Singapore dollar to appreciate faster to curb inflation. Secondly, the non-US dollar currencies (Euro, Yen, Pound etc.) in the Official Foreign Reserves depreciated sharply against the US dollar and Singapore dollar. Of course, with perfect hindsight, the MAS trading team should have bought more US dollars but that is too much to ask. But given more time, the MAS trading team should be able to make changes to its portfolio to minimize future exchange translation losses. As has been demonstrated in the past, MAS normally generates an annual profit every year - 2022 is exceptional! Hence the MAS’s loss should not be read as a great loss of fiscal revenue which limits the government’s ability to do more to help Singaporeans to cope with the pain caused by inflation. This was what the ST article was alluding to, by saying, “The net loss meant that MAS did not contribute to Singapore’s consolidated fund from which government expenditure is made.” It is also not justified to say MAS’s loss “may strengthen the resolve to proceed with the planned GST hike starting from January 2023”. The PSP continues to think that the GST hike is unnecessary and should be rescinded as part of the package to fight inflation. The ST article shows we need to read deeper into the narratives provided by the media. Singaporeans deserve better. For Country For People.   Leong Mun Wai      Read More →

I refer to the article ‘Cost of living among top concerns’ (ST, 15 Jul) It states that "Close to half of respondents said the city-state should focus on providing support to Singaporeans to cope with the rise in GST; and providing immediate financial support to households to cope with daily expenses, utilities and education expenses, and supporting children from disadvantaged families through programmes." Click to enlarge Comment: Despite the GST voucher scheme as well as the $100 CDC vouchers, does this mean there is still a substantial number of S'poreans who feel that the govt is not doing enough in the context of rising inflation? In this connection, the headline inflation rate for May 2022 was 5.6% whilst transportation costs have increased by 15.5% year-on-year, followed by food costs at 4.5%. Such a statistic, arguably, did not resonate well with the public - a recent Blackbox survey showed that 37% of respondents said that inflation has had a "significant" impact on their lives. Some 20% of respondents said that the govt was handling inflation "very badly" and 26% felt that the govt was dealing with inflation "quite badly". What does this tell you about the struggles of the not-so-rich Singaporeans who are struggling to make a living? From the article, other interesting statistics pertaining to the costs of living include: - 4 in 10 respondents were “rather or very” worried about cost of healthcare, utilities and food possibly rising this year - 47% of those polled from June 24 to July 4 were “rather or very” worried about the planned GST increase - About 6 in 10 said their families have adjusted their spending habits or in order to reduce expenses to cope with rise in prices Not surprisingly, young respondents aged 21 to 29 and middle aged respondents aged 40 to 49 faced a decline in mental or emotional health. Does this paint an optimistic picture for the future? Does this average SIngaporean have a better life since the last general election? Does this, arguably, mean that the ruling party has failed in delivering a better life for S'poreans?   Leong Sze Hian      Read More →