Will the Cyprus act of taking money from the bank depositors be the start of a loss of confidence in banks in the Eurozone?

One thing we know for sure is that depositors in Cyprus will be making massive withdrawals from their banks.

If the same thing happens to banks in places like Spain, Italy and Greece, they could very well run into serious trouble soon. And that could be massive.

Why the Cyprus Bail In Is a Bigger Deal Than You Think

To leave your comments, please go to : Why the Cyprus Bailout Is a Bigger Deal Than You Think

Restructuring for quality growth

1. Further tightening of foreign worker policies
2. Providing a 3-year transition support package
3. Strengthening productivity incentives
4. Developing capabilities for new growth incentives

Companies have been hit by a further increase in the foreign workers levy, which has exceeded $1000 in certain categories. Those companies that are unable to restructure will not be able to survive.

To offset this increase, companies can rely on the transition support packages and also the productivity grants. But ultimately, they will need to find a way to reduce their reliance on foreign workers.

Building a more inclusive society

1. Promoting social mobility
2. Sustaining a fair and progressive tax system
3. Strengthening social safety nets
4. Providing direct assistance for cost of living

Individuals will be able to get more GST vouchers, 30% tax rebates (up to $1500) or 50% for aged 60 and above, the usual S&C and utility rebates, higher workfare income coverage and $200 Medisave topup for those aged 45 and above.

However, there will be higher car and property taxes, which will affect more of the higher tier categories.

For more details, you can refer to the full budget text and summary which can be downloaded below:

Singapore Budget in Full (pdf)

Singapore Budget 2013 in brief (pdf)

To leave your comments, please go to : Singapore Budget 2013

The three desired outcomes of the White Paper are:

• Sustaining a Core Singaporean Population
• Creating Good Opportunities for Singaporeans
• A high quality living environment

In the paper, it was outlined that to meet the outcomes, it would be necessary to grow the population to 5.8-6 million in 2020 and 6.5-6.9 million in 2030. This would be the central idea that the white paper is trying to sell to you.

With declining birth rates, the population growth would have to be done via taking in 15,000 to 25,000 new citizens and granting about 30,000 PRs each year.

Highlights from White Paper Press Conference

The other key proposals to meet the desired outcomes include:

• Encourage Marriage and Parenthood
• Remain Open to Immigration
• Enhance Integration Efforts
• Create Good Jobs for Singaporean Core in Workforce
• Complement Singaporean Core with Foreign Workforce
• Moderate Overall Workforce Growth Rates
• Plan and Invest in Infrastructure Ahead of Demand
• Implement Infrastructure Programmes
• Explore New Technology and Innovative Solutions

For those who have not read the Singapore Population White Paper, you can download it from here:

Population White Paper: A Sustainable Population for a Dynamic Singapore (3Mb)

I am sure many of us would agree with some of the recommendations like encouragement of parenthood, planning infrastructure ahead of demand and exploration of innovation.

However, I would like to highlight the danger of using population growth to achieve some of the desired outcomes. Decades from now, we would be faced with the same set of problems and will again need to rely on population growth to “grow” out of the problem.

What is the maximum population that this tiny island can ultimately support?

The day will come when population growth is no longer possible.

Instead of using population growth as a means to an end, the earlier we can start planning for population stabilization, the better.

For an alternative view of why more might not necessarily be better, you might want to read this article written by a former director of the United Nations Population Division:

Is Population Growth a Ponzi Scheme?

To leave your comments, please go to : Singapore Population White Paper

The report takes stock of how Singapore has fared in key areas of national interest, highlights the key trends and challenges facing Singapore and how public agencies are working together to address them.

I have extracted out some snippets from the report which try to tell us that:

• Our labour market is near full employment, and job creation remains healthy. The employment rate for Singapore’s resident population aged between 25 to 64 years has gradually increased over the years.
• The quality of our workforce has improved over the years as educational levels have risen. With rising educational attainment, more of our youths are achieving their potential.
• Singapore remains one of the world’s most competitive economies, going by international rankings. It also continues to attract strong foreign direct investment.
• While inflation is higher than what we would like, both median and lower-income households enjoy significantly higher real incomes today, i.e. after accounting for inflation, compared to five years ago.
• Income inequality has not changed much. Transfers and taxes have reduced the 2011 Gini coefficient from 0.473 to 0.452, a level seen in 2003.
• For those who work consistently, the CPF system will provide adequately for retirement, provided they choose their housing prudently and use their CPF savings wisely.
• Singaporeans are living longer and healthier lives. There is also an increased usage of sports facilities.
• Our society is rapidly ageing due to declining birth rates and fertility. Singapore’s total population grew by 16%, from 4.59 million in 2007 to 5.31 million in 2012.
• Medisave and MediShield help to cover more than 90% of a subsidised hospital bill. This helps to keep healthcare affordable.
• Our debt serving ratio for new HDB units for first time buyers in non-mature estates remain well below international benchmarks. Even as HDB has ramped up the supply of flats, the quality has been improving.
• Overall satisfaction with public transport services declined in 2011, but the government is expanding the capacity of the public transport system.
• We are recycling more and water efficiency is getting better. Air quality remains good.
• More people are giving to charity and volunteering.
• We continue to enjoy peace and stability, while crime is getting lower.
• People are more satisfied with the e-services provided by the government.

So I guess it’s time to pat ourselves on the back and celebrate that life is getting better.

For those who are interested to read the full report, you can download it from here:

Singapore Public Sector Outcomes Review 2012

To leave your comments, please go to : Singapore Public Sector Outcomes Review 2012

GDP growth in Q3 2012 was much weaker than expected.

The Singapore economy expanded by 0.3% in Q3 2012 compared with the same period last year. This was much lower than the median forecast of 2.3% reported in the Sep 2012 Survey.

The respondents expect the economy to grow by 1.5% in 2012, a significant downgrade from the 2.4% median forecast in the previous survey.

The most likely outcome is for the Singapore economy to grow by between 1.0 to 1.9% this year, lower than the 2.0 to 2.9% projected in the previous survey.

The median CPI-All Items inflation forecast for 2012 rose to 4.7%, an increase from the 4.4% reported in the September survey. For Q4 2012, CPI-All Items inflation is projected at 4.4%.

The respondents expect MAS Core Inflation to be 2.6% in 2012, marginally higher than the 2.5% from the previous survey. As for the labour market, the respondents expect the unemployment rate to be 2.0% by year-end, slightly lower than the 2.1% from the previous survey.

Forecase for 2013

For 2013, the respondents expect GDP growth to be 2.7%, while CPI-All Items and MAS Core Inflation are forecast to come in at 3.8% and 2.2% respectively. As reflected by the mean probability distribution, the most likely outcome is for the Singapore economy to grow by 2.0 to 2.9% next year, a downshift from the 3.0 to 3.9% in the last survey.

The full results can be downloaded here:

MAS Dec 2012 Survey Results 

To leave your comments, please go to : MAS Dec 2012 Economic Survey