from Global Investing:
Home is where the heartache is…
On a recent trip home to Singapore, I was startled to learn just how much housing prices in the city-state have risen in my absence.
A cousin said he had recently paid over S$600,000 -- about US$465,000 -- for a yet-to-be-built 99-year-lease flat. Such numbers are hardly out of place in any major metropolis but this was for a state-subsidised three-bedroom apartment.
Soaring housing prices have fueled popular discontent -- little wonder as median monthly household incomes have stagnated at around S$5,000.
For its part, the government -- which houses 80 percent of people on the densely populated island -- insists that public housing prices are shaped by 'market forces', pointing to a raft of financing schemes to help first-time buyers.
What's less contentious is that Singapore is only part of a regional real estate boom that has driven property values by as much as 70 percent since the start of 2009 in cities such as Sydney, Hong Kong and Beijing.
Like Singapore, the government in China is acting to cool house prices that have skyrocketed in recent years out of the reach of a large swathe of its middle classes.
Chief among Beijing's policy arsenal is social housing. The government is stepping up construction of public housing, targeting a rollout 36 million affordable homes from now until 2015. At the same time, clampdown on property speculation has also helped ease Chinese housing prices.
from Global Investing:
Can Eastern Europe “sweat” it?
Interesting to see that Poland wants to squeeze out more income from its state-owned enterprise (SOE) sector in the face of slowing economic growth and financing pressures.
Warsaw wants to double next year's dividends from stakes in firms ranging from copper mines to utility providers to banks.
Fellow euro zone aspirant Lithuania has also embarked on reforms aimed at increasing dividends sixfold from what UBS has dubbed "the forgotten side of the government balance sheet". It wants to emulate countries such as Sweden and Singapore where such companies are managed at arm's length from the state and run along strict corporate standards to consistently grow profits.
The impetus isn't entirely ideological. Poland and Lithuania are desperately trying to balance their books and under European Commission rules, privatisation proceeds cannot be taken into account when calculating the budget deficit but SOE dividends can.
But "sweating" government assets to yield higher profits doesn't always come easy for central and eastern Europe. After all, this is a region where state ownership has been synonymous with inefficiency and stagnation.
Even so, the track record of emerging European governments on privatisation is mixed.
The haste at which state resources were sold off following the collapse of the Soviet Union had disastrous repercussions for economies such as Russia and Croatia. Recent efforts at state divestment from Poland to the Czech Republic to Romania have run aground on unrealistic price expectations, corruption or regulatory obstruction.
Sovereign wealth fund under discussion… in Rwanda
A number of African nations have established or are having debates about establishing sovereign wealth funds to manage their mainly resource-based wealth.
It may be surprising however to hear Rwanda — an aid-dependent nation racked by the 1994 genocide — is considering one. Its foreign minister Louise Mushikiwabo says a sovereign fund would help develop its economy and ease dependency on aid.
“We should not rely on someone else’s money. It’s about our own dignity. We’re looking at every policy — economic policy and foreign policy — to make sure Rwanda stands on its feet. Technology is one sector we’re looking at in Rwanda and how to use our own innovation,” Mushikiwabo tells Reuters during her visit to our London office.
The landlocked nation has been also looking at the agricultural sector as well as methane gas, of which the country plans to become an exporter in the future.
Mushikiwabo says one plan under discussion is to create a fund that has a size of $2 per working population (Rwanda’s total population is about 10 million). She adds that Rwanda is in close cooperation with Singapore — which has one of the world’s biggest sovereign wealth funds, sourced from its export windfall revenues – in building human capacity and skills.
So what’s the timeframe? Mushikiwabo says in the next 10 years, given the country’s strategy to become a middle-income country economy by 2020.
Big ambition for Equatorial Guinea
This week has seen a rush of key policymakers and business executives from Africa flocking to London. Apart from Sierra Leone, oil and gas executives have been discussing the outlook for Equatorial Guinea, a small central African state rich in oil.
Equatorial Guinea made a relatively rare foray into the global news earlier this month for a presidential pardon of former British army officer Simon Mann, who was serving a 34-year prison sentence in the country for his role in a failed coup d’etat in 2004.
Gabriel Obiang Lima, vice minister of mines, industry and energy, was in London to talk about his ambition for the country. “Our aim is not to be the Kuwait of the region. It’s to be the Singapore of the region,” he told dozens of business executives in a conference in London on Wednesday.
“Equatorial Guinea has to have other industries that are not dependent on oil and gas.”
But it has a long way to go towards establishing a Singapore-like country. The U.S. State Department says application of the laws remains selective and corruption among officials is widespread, and many business deals are concluded under nontransparent circumstances.
The vice minister says Equatorial Guinea is investing heavily in ports, health care and infrastructure.
What me, British economist?
Time was when a British education had a cachet, especially among Britain’s far-flung colonial territories.
But could the prestige of even a Cambridge or Oxford degree be a little dulled in these parlous days for the British economy, now labouring under massive public debt and a decade-high unemployment rate?
That appears to be the case in the former British colony of Singapore, whose rapid economic development since independence in 1965 has seen it accumulate hundreds of billions of dollars in reserves and attain a GDP per capita on par with Italy.
The city-state’s newest opposition politician Kenneth Jeyaretnam has complained that the Singapore press — often accused giving more favorable coverage to the ruling party — has been referring to him as a “British-trained economist”.
Jeyaretnam, like many members of Singapore’s political establishment — including the country’s first prime minister and current prime minister — went to Cambridge.
“I wonder why I have never read in the Singapore press, British-trained mathematician prime minister Lee Hsien Loong or British trained-lawyer, Minister Mentor Lee Kuan Yew,” Jeyaretnam said in a speech to the Singapore Foreign Correspondents Association earlier this month.
“Naturally I suspect that the mainstream media want to light up a subliminal marker in the people’s minds that a) I’m a foreigner and b) that my economics is suspiciously left-wing because it’s from a country associated with economic failure and the welfare state.”
People like Jeyaretnam is needed in Singapore. Will he last for long though?
