Saturday, November 29, 2008

S'porean hostage killed

Nov 28, 2008
Mumbai terror attacks

By Teh Joo Lin , Carolyn Quek

THE Mumbai terror attacks claimed a Singaporean victim when lawyer Lo Hwei Yen, 28, was confirmed among the dead on Friday night.

The tragic task of identifying the body of Singapore's first terror victim fell to her husband, corporate counsel Michael Puhaindran, who had flown to Mumbai on Thursday night.

The couple held their wedding in Bali only in June last year.

Mr Puhaindran, 37, last heard from his wife through two phone calls she made to him on Thursday after she had been taken hostage at the Trident Oberoi hotel.

She had gone to Mumbai on Wednesday to attend a business seminar and it was meant to be only a one-night trip.

At a late-night press conference on Friday, the Ministry of Foreign Affairs confirmed that the worst had happened.

The ministry first received word at about 8pm that a body matching Ms Lo's description was found on the 19th floor of the hotel.

Confirmation came at 9.35pm when Mr Puhaindran, accompanied by the High Commissioner, identified the body.

She was among 24 Trident-Oberoi hotel hostages found dead on Friday.

Acting Prime Minister S. Jayakumar said in a statement on Friday night that he and his Cabinet colleagues were painfully saddened by Ms Lo's death.

'The loss of any life to terrorism is sad but the loss of a fellow Singaporean is a pain more keenly and more closely felt by every Singaporean. I know that all Singaporeans feel deeply for the family and our hearts go out to them in their time of sorrow and grief,' he said.

Senior Minister Goh Chok Tong also expressed sadness, saying he knew Mr Puhaindran's family and had attended the couple's wedding.

'Leave immediately'

Nov 28, 2008
Crisis in Thailand

LATEST: Thai police warn protestors at Don Mueang to leave immediately or face 'necessary measures'.

BANGKOK - THAI police on Friday ordered protesters to immediately leave one of Bangkok's besieged airports, as anti-government leaders rejected last-ditch attempts to negotiate an end to the crisis.

A police officer at the domestic Don Mueang airport, which was seized late on Wednesday, read out an order to demonstrators a day after Prime Minister Somchai Wongsawat declared a state of emergency.

'All protesters must... leave the rally site otherwise law enforcement officers will carry out appropriate and necessary measures to solve the situation,' the order said.

As fears of bloody clashes escalated, the founder of the protest movement rejected a personal plea from the premier to hold talks to end the occupation of Don Mueang and Suvarnabhumi international airport.

'Today the prime minister contacted me on the telephone to negotiate. There are no talks,' Mr Sondhi Limthongkul told supporters at Don Mueang, insisting that he was not afraid of a police crackdown.

The founder of Thailand's anti-government protest movement said he had rejected a personal plea from the prime minister to hold talks on the siege of Bangkok?s airports.

Mr Limthongkul, who set up the People's Alliance for Democracy said demonstrators would not leave until premier Somchai Wongsawat resigned, adding that the PM should 'seek asylum in Myanmar'.

'The government has asked to negotiate - that means the government is defeated,' he said.

'I ask Prime Minister Somchai to seek asylum in Myanmar within 24 to 48 hours.'

Mr Somchai sacked his national police chief on Friday, a day after declaring a state of emergency and ordering police to handle protesters besieging Bangkok's main airports.

General Patcharawat Wongsuwan, who was moved to an inactive post, had resisted previous orders to crackdown on the street protesters who began a 'final battle' to unseat the government on Monday, Thai media reported.

'The removal was the result of his performance during this current crisis,' government spokesman Nattawut Saikuar told NBT television a day after Mr Somchai declared a state of emergency to end the crippling airport sieges.

'The transfer is because of suitability and in line with the situation. The prime minister considered how he (Gen Patcharawat) handled the current situation,' said Mr Saikuar.

'There were many reasons taken into consideration.'

According to a government statment released, Mr Somchai has appointed Police Major General Prateep Tanprasert, the inspector general, as acting national police chief.

Dozens of riot police with truncheons and shields have gathered at Bangkok's Suvarnabhumi airport after talks with anti-government protesters apparently failed to end a crippling blockade.

A Reuters correspondent saw 100 police set up a perimetre at the airport headquarters building, about 300 metres from where the People's Alliance for Democracy (PAD) protesters had besieged the main terminal.

Earlier, police said they hoped talks with protest leaders would end the siege, but warned they would 'take other steps' if they failed.

'We are asking them to allow the airport to resume operations,' Lieutenant-General Suchart Muenkaew, the chief police negotiator, told reporters.

'We will keep talking, but if it fails we will take other steps. The last step will be to disperse them.'

Thailand's premier said earlier on Friday that talks are under way to persuade anti-government protesters to leave Bangkok's main airports before a potentially bloody crackdown.

Demonstrators stormed Suvarnabhumi international airport on Tuesday and blockaded domestic Don Mueang airport early on Thursday in the latest twist to their months-long attempts to unseat the government.

Prime Minister Somchai Wongsawat declared emergency rule at both airports late on Thursday, but a day later he said that officials were negotiating with the activists.

'The government does not want to trigger any violence or casualties, so to implement the law under international practice, as of now negotiations are under way,' Mr Somchai told reporters in the northern city of Chiang Mai.

'I am not setting a deadline but I have instructed officials to carry this out according to the plan. Therefore it's up to the officials,' he said.

Bangkok Metropolitan Police commander Lieutenant General Suchart Mueankaeo said the prime minister had instructed to handle the situation with care and to avoid a clash with protesters.

'Initially police will negotiate and we have talked with them on the telephone, but we have not yet made a precise appointment,' said Gen Suchart, who has been tasked with dispersing protesters from Don Mueang.

He said police will now go to the rally site and explain to protesters that their acts violate the law.

With tensions running high between the government and the military, the army has already said it is opposed to the use of force to drive protesters from the airports.

Clashes between police and demonstrators in central Bangkok on October 7 left two people dead and around 500 wounded in the deadliest such incident in Thailand for 16 years.

In a televised address from the government stronghold of Chiang Mai, 700 km north of Bangkok, Mr Somchai said the export- and tourism-driven economy could not tolerate further disruption.

'I need to do something to restore peace and order,' he said.

A similar declaration in September aimed at dislodging protesters occupying Government House was ignored by the army.

The airport sit-ins have forced hundreds of flights to be cancelled, stranding thousands of foreign tourists in one of Asia's biggest air hubs and grounding millions of dollars of air cargo.

Protesters vowed on Friday to 'fight to the death,' as police said they would negotiate with the demonstrators before trying to evict them under emergency laws. 'We are not afraid. We will fight to the death, we will not surrender and we are ready,' one of the main protest leaders, Somsak Kosaisuk, told a crowd of supporters at the domestic Don Mueang airport.

Another protest leader, Suriyasai Katasila said, 'We will not leave. We will use human shields against the police if they try to disperse us.'

PAD guards had set up roadblocks on the main expressway to the airport and were stopping all cars and checking passengers and trunk compartments.

The roadblocks were manned by youths in black jackets, faces partly covered by masks. Some wore body armour and wielded wooden stakes and golf clubs.

A government spokesman said the economy could lose at least 100 billion baht (S$4.2 billion) if the sieges drag on for a month, and GDP growth for the year could be cut to 4 per cent from a current estimate of 4.5 per cent, already a seven-year low.

A University of the Thai Chamber of Commerce survey forecast revenue losses of between 76 billion baht and 120 billion baht in the sector if the chaos continues for another month.

Final battle
Thailand's three-year-old political crisis has deepened dramatically since the PAD began a 'final battle' on Monday to unseat a government it accuses of being a pawn of former leader Thaksin Shinawatra, ousted in a 2006 coup. Mr Somchai is Thaksin's brother-in-law.

Pressure has built on the army to step in since Mr Somchai rejected military calls to quit, but pro-government forces threaten to take up arms if the elected administration is ousted, raising fears of major civil unrest.

Army chief Anupong has repeatedly said he would not take over, arguing the military is powerless to heal fundamental political rifts between the Bangkok elite and middle classes who despise Thaksin, and the poor rural and urban majority who love him.

But rumours of the army preparing to launch what would be Thailand's 19th coup or attempted coup in 76 years of on-off democracy continue to swirl around the capital.

The government offered to shuttle thousands of stranded tourists by bus to U-Tapao, a Vietnam War-era naval airbase 150km east of Bangkok, as an alternative landing site for airlines.

Aviation Department chief Chaisak Angkasuwan said 20 regional airbases in Thailand were available as alternatives. -- REUTERS, AFP

[Comment: What democracy is there when after two elections, and pro-Thaksin politicians are elected again and again, the anti-Thaksin just refuse to take no as an answer. The properly elected Thai Govt has bend over backwards to not confront these protesters and that only seem to have harden their resolve and feed the illusion that what they are doing is right. The military and the police are also confused about their roles. But now the protesters have effectively blockaded the city but closing both airports, disrupted trade and business for all the other Thais, inconvenienced innocent travellers for their own selfish political purpose, and jeapardised the livelihood of many other Thais who depend on trade and tourism for their income. Democracy also means accepting that your choice is the choice of most other people. It is not democracy to say, we're going to have elections after elections, until our man wins. Or else we'll bring this country to its knees. That's blackmail.]

Friday, November 28, 2008

Why I left Sri Lanka for Singapore

Nov 28, 2008

Sharmila Gunasingham is the daughter of C. Gunasingham, who was Sri Lanka's High Commissioner to Singapore between 1979 and 1983. She became a Singapore citizen in 1985, a decision which owed much to her father's strong admiration for Singapore.

By Lee Siew Hua

MS SHARMILA Gunasingham, of Sri Lankan origin, lives today in a 'house of debate' in Singapore.

The youthful-looking lawyer enjoys lively contests of ideas with young Singaporeans, sometimes till 4am.

These are the friends of her son and daughter, both new graduates of British universities.

Their debates often centre on one controversial issue: the political choices Singapore's leaders made in building the island-state from the ground up.

The issue is one close to her heart because the country of her parents, Sri Lanka, and her own chosen country, Singapore, started out very similarly, but are today worlds apart.

Both were former British colonies, with ethnically diverse populations. When Ceylon, as Sri Lanka was then known, was given independence in 1948, it was to have been a model for other Commonwealth countries to follow.

Unfortunately, it failed to live up to expectations. Instead of preserving English as the language of administration, the new government chose Sinhalese, the language of the dominant ethnic group which formed three-quarters of the population, as the sole official language of the country.

It also chose Buddhism, the religion of the Sinhalese, as the state religion, where previously, there was none.

Together with other discriminatory policies against the Tamil minority, the result was a civil war between Tamil rebels and the Sinhalese government that rages to this day.

Ms Gunasingham's late father C. Gunasingham, was High Commissioner to Singapore between 1979 and 1983. He was an ardent admirer of the city-state, and spoke often with his young daughter and two sons about 'the fatal mistakes that Singapore did not make'.

The young Sharmila spent many of her growing up years in Washington and London. She grew up Americanised, pledging allegiance to the United States flag in school every morning.

But her parents soon realised she was getting estranged from her Indian culture, and decided that their bubblegum-chewing daughter should learn classical Indian dance.

Their hope was that she would be, in the words of her father, 'at home as much with the Nine Symphonies of Beethoven as with the Five Melodies of Sri Tyagarajah, a great Tamil saint'.

While still a student in London University, where she did her law studies, she entered into an arranged marriage to a fellow Tamil. She was 20 then.

Her father, whom she describes as a beloved friend and mentor, later persuaded her to leave London and make Singapore her home.

Highlighting Singapore's meritocracy, he told her she could rise faster in her career here than in London, as a female from a minority community. Here, she could also have children without sacrificing her career.

He was right. After four years in a major law firm with Chinese senior partners at the helm, she was made a partner along with two male Chinese colleagues.

'The difference in my case was that I was a female from a minority community who was also in full-term pregnancy,' she says, adding that 'whatever my learned colleagues in the West might say about equal opportunities, I doubt that I would have made it to partnership so quickly and that too whilst pregnant, if I had been in a law firm in their part of the world at that time'.

By 1985, she had taken up Singapore citizenship.

Today, she heads Global Law Alliance, a boutique corporate law firm that represents global financial institutions and international companies.

On Sept 16, she was moved to write a letter to Minister Mentor Lee Kuan Yew after reading from the newspapers that he had kept a commitment to address the Global UBS Philanthropy Forum, despite being warded for an atrial flutter.

In her letter, she compared the political fates of Sri Lanka and Singapore. Based on the sad journey of Sri Lanka which was once a British gem, and her own fulfilled dreams in Singapore, she wrote that she had come to greatly respect Singapore's form of democracy.

She elaborated on her thoughts in an e-mail interview with Insight. (See separate story.)

By speaking up, she feels she has the courage to be honest and is not a 'sycophant' or 'spokesman' for the People's Action Party (PAP).

'We need to demonstrate an appreciation for our leaders,' she maintains, citing a Tamil sage Thiruvalluvar who asked, 'What has learning profited a man, if he cannot demonstrate respect for good and exemplary leadership?'

Asked about her hopes for Singapore and if anything here perturbs her, she replies: 'Our human values also need to reflect that money breeds envy and very often, trouble.'

In this light, she feels the PAP's measures of success should not be quantified in financial accolades alone.

After all, growth fluctuates, based on what is happening in the global economy.

The real work of the Government, she continues, must be weighed with realistic measures: long-term stability, social justice, racial harmony, personal safety for citizens, good education and upliftment of the disadvantaged.

Also count infrastructure, health care and being able to 'preserve the accumulated reserves built up over the years by competent leaders who were able to steer the economy through its ups and downs', she adds.

For her, these are the achievements that matter and the values to be instilled in young people, 'so that success is not quantified by material gains, including the value of one's property'.

This is one lesson she shares with her children, who have travelled extensively with her and witnessed abject poverty in India and Sri Lanka, and encountered London's homeless.

'I have taught them as much as possible about learning to see beyond 'the self' and material gratification.'

And their idealistic friends with whom she has spent long hours debating issues of freedom and political leadership?

Rather than lamenting the lack of liberal democracy, she suggests, 'our youth should be channelled to focus on the competitive advantages that they are going to enjoy in what has been called the 'New Asian Hemisphere',' by Professor Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy. That 'hemisphere' includes China, India, Singapore and the Middle East.

She believes our youth will 'out-perform' Western counterparts.

She is delighted that today, the friends of her offspring agree with her that 'Singapore's strength has been its style of leadership'.

Her house of debate may have opened a couple of doors in young minds.

Nov 28, 2008

'He had been to Singapore in the late 50s/early 60s and thought it was a country with no future'

'WHEN he served in London in the High Commission (1975-1978), there was some jealousy that as a Tamil from a minority community, he continued to hold high positions in choice postings.

A vicious and false rumour started to spread that he was a sympathiser of the Tamil Tiger movement. President J.R. Jayewardene, Sri Lanka's first executive president, who posted him to London, decided that my father's name should be cleared by having a Criminal Investigation Department (CID) team from Sri Lanka visit London to conduct investigations.

I, as a law student, felt the injustice of it all and realised the price my father had to pay for representing a country with ethnic problems.

I saw him through those painful days when he was under investigation and he was finally exonerated by the CID team as being completely innocent.

It was interesting that everyone at the High Commission who was interviewed in the course of the investigations, be they Sinhalese or Tamils, proclaimed his innocence.

I remember, in particular, that the non-professional staff like the peons and cleaners, to whom he had always shown kindness, were most vociferous in their defence of him...

Throughout his tenure as High Commissioner to Singapore (1979-1983), my father was not only amazed but also profoundly influenced by Singapore's transformation and its rapid pace of development from a city state with no resources to a modern metropolis with its well- developed infrastructure, cosmopolitan environment and good governance.

He had been to Singapore in the late 1950s/early 1960s and thought it was a country with no future...

My father's appreciation for Singapore's style of leadership, which he witnessed during his days as High Commissioner and which he imparted to me in letters he wrote to me, centred on Singapore's ability to achieve political stability through the sheer political will of its leaders, like Minister Mentor Lee Kuan Yew, who was prime minister at that time.

Despite Singapore having a majority Chinese race, the policies that had been implemented by its leadership, he said, had led to social cohesion by promoting racial and religious harmony in a multi-racial, multi-ethnic country like Singapore. Having achieved political stability, Singapore was able to focus on economic development, adopt open-door policies towards foreign investment, develop its infrastructure, its position as a financial centre and a regional hub.

In contrast, he said, other countries were grappling with the lack of political stability, protectionism in economic policies, exchange controls, and trade union strikes, which were notably absent in Singapore because the Government and trade unions were in basic agreement on economic objectives. Above all, he valued Singapore's corruption-free style of government...

Race riots break out

IN 1983, shortly after my father's return to Sri Lanka, racial riots broke out in Sri Lanka. As he was now Economic Adviser to the President, he was a high-ranking public servant from the minority Tamil community, and therefore a target of attack for the Sinhalese mobs that were burning down the homes of the Tamils.

I was deeply concerned for his and my mother's safety but, just before the thugs and looters could reach his home, he and my mother were removed to the residence of the President by the presidential guards, and he remained there until the rioting stopped and the nationwide curfew lifted.

My parents were the exception; they had the protection of the President himself. But the Tamil masses did not enjoy the same privileges. As the rioting continued, Tamils were fleeing for their lives from their attackers, and many from their burning homes, taking nothing with them but the clothes they wore.

They fled to any safe port, had little idea where they were headed, or what fate might have in store for them. They had lost their livelihoods, their homes, their possessions and would have to start life all over again from scratch in faraway lands like Canada, Europe, the United States and Australia.

Many of the Tamils who fled Sri Lanka had experienced the first outbreak of racial riots in 1958, again stage-managed by politicians.

These tragedies had a profound effect on me and my family in Singapore (including my two children), in our attitude to political leadership.

My father was deeply pained. As economic adviser, he was responsible for reviewing and recommending to the President foreign investment proposals and helping to open up the economy. His vision for Sri Lanka, a country blessed in many ways, was, however, not to be because in the absence of political stability, there was no hope of Sri Lanka realising its economic potential.

In an interview on Singapore television in August 1987, he said: 'In multi-ethnic societies, fundamentalism, sectarianism, politics of race, language, class, religion will destroy the foundations of any country.

'Had we (in Sri Lanka) had less reckless politics, we might have solved the problem of bringing about national cohesion and statehood, comprising different communities who did not know a common statehood before, except the colonial unification. There is nothing wrong with religion, there is nothing wrong with politics. But when they get mixed up, then we are in trouble, we are really in trouble.'

A crescendo of hate

HE ALSO pointed out that Western-style liberal democracy and irresponsible press reporting in Sri Lanka had a damaging effect on the country.

In communal riots, he said, 'you do something on one side of the communal fence, then they do something on the other side of the communal fence, then you do something on this side of the communal fence, then they do something else'. So action and reaction till 'we reached a crescendo of hate between communities who have lived together and still live together'.

The press, in such situations, he said, became the key battleground in the conflict by reporting these reactive factors which came into play.

The newspapers in Sri Lanka also decided to write a malicious and false story about my brother, Dr Hari Gunasingham, being expelled from Singapore for arms dealings. With a first class honours as well as a doctorate from Imperial College, London, this brother of mine is a gentle soul and a brilliant scientist. In fact, he was the recipient of an award as the Young National Scientist of Singapore in 1988, and he too gave up his home in London to become a Singaporean.

I was made to understand that the Sri Lankan newspaper allegations about my brother were an attempt to embarrass President Jayewardene since he had appointed my father, a Tamil, to such a high-ranking position as his economic adviser, and here was the economic adviser's son running riot.

Despite all the sensationalised publicity, my father decided to sue the newspapers. He fought it out in the Sri Lankan courts for 10 years while remaining in his position as Economic Adviser to the President.

The great thing that also comes with some South Asian democracies is the protracted nature of their court proceedings. I attended many of the court sessions and was quite horrified when my father walked in and the lawyers for the newspapers attacked him in open court as the great presidential adviser whose son was an arms dealer and had been expelled from Singapore.

Our lawyer, who was a Queen's Counsel, was a class act and he bashed the newspapers in a way that I had never witnessed in my life. My father and brother not only won their case against the newspapers, but the newspapers also had to issue a public apology. I learnt from my father through this experience the value of being courageous when it comes to standing up for one's principles.

At the end of his tenure as economic adviser, I influenced my father to give up political life in Sri Lanka as it had taken its toll on his health, and asked him and my mother to return to Singapore to live with me. He agreed to do so and to become a permanent resident of Singapore, but felt he should not take up Singapore citizenship, given the offices he had held.

He was a rare breed. Those years in Singapore, he said, were the happiest years of his life. He joined a think-tank and was a senior fellow at the Institute of Southeast Asian Studies. He immersed himself deeply in political ideology and left with me shortly before his death his final conclusions on political leadership, including the mistakes that Sri Lanka had made and those that Singapore had avoided and should continue to avoid.

I can summarise these as follows:


Singapore and Sri Lanka are both island nations and former British colonies. When the British left Singapore, it was fortunate to have visionary leaders like Mr Lee, who kept the use of English as the language of administration rather than encouraging nationalistic sentiments by imposing the language of the majority on the minorities.

The English-language policy enabled generations of Singaporeans not only to have a competitive advantage in the global economy, but was also sensitive to the feelings of the minorities in Singapore by not imposing the language of the majority on them.

By contrast, although Sri Lanka had very outstanding people with regard to their English education, and their ability to speak and write English was excellent, after 1956, legislation was passed to make Sinhalese, the language of the majority, the sole official language in Sri Lanka.

This resulted in the next generation of Sri Lankans having barely a second-language knowledge of English, and created a chasm between the Sinhalese and the Tamil people.


If there are no strong curbs placed on attempts to politicise race, religion, language, class or chauvinism by politicians or the press, the foundations of a civic society will be destroyed.

Although there were sensitive ethnic issues in Singapore, which nestled between countries like Indonesia and Malaysia, and Singapore had experienced racial riots in the 1960s, the Singapore leadership was careful to keep the Pandora's box shut by not pandering to its majority Chinese race to win votes.

In contrast, the leaders of Sri Lanka, who had forged multiracial unity in opposition to the British until their independence, resorted to racial tactics supporting the majority Sinhalese for the sake of seizing political power.

I recall my father recounting the story of Mr Bandaranaike, who was born Solomon West Ridgeway Dias Bandaranaike in a highly Westernised Sinhalese Christian family that held positions of authority under British rule, and then changed his reference to S.W.R.D. Bandaranaike and his religion to Buddhism, discarded the Western dress of the elite and campaigned on political issues favourable to the Sinhalese.

He opened the Pandora's box by making Sinhalese - the language of the majority - the sole official language of the country, and Buddhism the state religion. This resulted in resentment from the Tamil minority and incited racial tension.

It was not only the minority Tamils who were traumatised by the sheer madness of civil disobedience in Sri Lanka; the mayhem unsettled even those among the Sinhalese who were peace-loving. It was also the start of the continuing exodus of Sri Lankans of all races from what was once a peaceful country regarded as a paradise and the 'Pearl of the Indian Ocean'.


Singapore's leadership continued to display the political will that was needed to uphold meritocracy and multi- culturalism, and avoided passing legislation that discriminated against the minorities.

In contrast, my father said, in Sri Lanka, after Mr Bandaranaike was assassinated by a Sinhalese Buddhist priest, who felt that he had not gone far enough, his widow, Mrs Sirimavo Bandaranaike, who succeeded him, went further by introducing a system of quotas for each ethnic group. In effect, this meant that students from the Tamil medium had to obtain higher marks than their Sinhalese counterparts to enter university.

This resulted in disappointed Tamil youth resorting to militancy, and led to the terrorist movement that Sri Lanka continues to face today. Regrettably, in my father's view, successive leaders of Sri Lanka have not had the political will to resolve the ethnic conflict through a political solution.


Singapore inherited and kept great British traditions, including the rule of law, good governance, the incorruptibility of public institutions and the sense of fair play. In other instances, Singapore's leadership had to adapt its model to suit Singapore's circumstances.

My father argued vehemently with his Western counterparts who criticised Singapore for what they thought was the lack of Western-style liberal democracy. It may be true, he said, that 'Singapore is a one-party state, but it still delivers the objects of democracy'.

For one thing, he felt, its leadership is the closest example one has anywhere to 'an intelligent, foresightful, self-correcting, self-renewing, self-regulating model which is politically, socially, culturally sensitive, and has in-built mechanisms for sounding public opinion and for social engineering'.

For another, its strong no-nonsense leadership style, far from being despotic or authoritarian, makes leadership 'the main catalyst of change, a factor in the making of events, a force that has enabled Singaporeans to engage the future, perhaps even ahead of their own readiness to do so'.


He pointed out to me often that Western critics of Singapore's form of democracy conveniently forget to tell us the dismal stories of democracies, 'where multi-party struggles in a representative system with a wide franchise make leaders prisoners of politics, where political will and courage are eroded and divisive issues are brought to the centre of political debate', not forgetting as well 'the sleaze, corruption, graft, fraud, money politics and abuse of power' which had become part of their permissive culture. No tyranny, he said, is worse than such democratic ones.

The divisive, adversarial style adopted in multi-party politics used to bug my father no end. He believed that national interests must prevail over party politics, which was not often the case in Sri Lanka.

My father died in Singapore in February 1997. Apart from the anguish that I felt in losing my best friend and mentor, I was sad that fate had given him just five years of happiness in Singapore, where he was truly fulfilled in his work and derived much joy in sharing my experiences and in helping to bring up my two children, who were profoundly influenced by him.'

Thursday, November 27, 2008

Road to crime is strewn with litter

Nov 27, 2008

A PLACE that is covered in graffiti and festooned with rubbish makes people feel uneasy. And with good reason, according to a group of researchers in the Netherlands. Dr Kees Keizer and his colleagues at the University of Groningen deliberately created such settings as a part of a series of experiments designed to discover if signs of vandalism, litter and low-level lawbreaking could change the way people behave. They found that they could, by a lot: doubling the number who are prepared to litter and steal.

The idea that observing disorder can have a psychological effect on people has been around for a while. In the late 1980s, Dr George Kelling, a former probation officer who now works at Rutgers University, initiated what became a vigorous campaign to remove graffiti from New York City's subway system, which was followed by a reduction in petty crime. This idea also underpinned the 'zero tolerance' which Mr Rudy Giuliani subsequently brought to the city's streets when he became mayor.

Many cities and communities around the world now try to get on top of antisocial behaviour as a way of deterring crime. But the idea remains a controversial one, not least because it is often difficult to account for other factors that could influence crime reduction, such as changes in poverty levels, housing conditions and sentencing policy - even, some people have argued, the removal of lead from petrol. An experimental test of the 'broken windows theory', as Dr Kelling and his colleague James Wilson later called the idea, is therefore long overdue. And that is what Dr Keizer and his colleagues have provided.

Dr Kelling's theory takes its name from the observation that a few broken windows in an empty building quickly lead to more smashed panes, more vandalism and eventually to break-ins. The tendency for people to behave in a particular way can be strengthened or weakened depending on what they observe others to be doing. This does not necessarily mean that people will copy bad behaviour exactly, reaching for a spray can when they see graffiti. Rather, says Dr Keizer, it can foster the 'violation' of other norms of behaviour. It was this effect that his experiments, which have just been published in Science, set out to test.

His group's first study was conducted in an alley that is frequently used to park bicycles. As in all of their experiments, the researchers created two conditions: one of order and the other of disorder. In the former, the walls of the alley were freshly painted; in the latter, they were tagged with graffiti (but not elaborately, to avoid the perception that it might be art). In both states a large sign prohibiting graffiti was put up, so that it would not be missed by anyone who came to collect a bicycle. All the bikes then had a flier promoting a non-existent sports shop attached to their handlebars. This needed to be removed before a bicycle could be ridden.

When owners returned, their behaviour was secretly observed. There were no rubbish bins in the alley, so a cyclist had three choices. He could take the flier with him, hang it on another bicycle (which the researchers counted as littering) or throw it to the floor. When the alley contained graffiti, 69 per cent of the riders littered compared with 33 per cent when the walls were clean.

To remove one possible bias - that litter encourages more litter - the researchers inconspicuously picked up each castaway flier. Nor, they say, could the effect be explained by litterers assuming that because the spraying of graffiti had not been prevented, it was also unlikely that they would be caught. Littering, Dr Keizer observes, is generally tolerated by the police in Groningen.

The other experiments were carried out in a similar way. In one, a temporary fence was used to close off a shortcut to a carpark, except for a narrow gap. Two signs were erected, one telling people there was no throughway and the other saying that bicycles must not be left locked to the fence. In the 'order' condition (with four bicycles parked nearby, but not locked to the fence) 27 per cent of people were prepared to trespass by stepping through the gap, whereas in the 'disorder' condition (with the four bikes locked to the fence, in violation of the sign) 82 per cent took the short cut.

Nor were the effects limited to visual observation of petty criminal behaviour. It is against the law to let off fireworks in the Netherlands for several weeks before New Year's Eve. So two weeks before the festival, the researchers randomly let off firecrackers near a bicycle shed at a main railway station and watched what happened using their flier technique. With no fireworks, 48 per cent of people took the fliers with them when they collected their bikes. With fireworks, this fell to 20 per cent.

The most dramatic result, though, was the one that showed a doubling in the number of people who were prepared to steal in a condition of disorder. In this case, an envelope with a ? 5 (S$10) note inside (and the note clearly visible through the address window) was left sticking out of a post box. In a condition of order, 13 per cent of those passing took the envelope (instead of leaving it or pushing it into the box). But if the post box was covered in graffiti, 27 per cent did. Even if the post box had no graffiti on it, but the area around it was littered with paper, orange peel, cigarette butts and empty cans, 25 per cent still took the envelope.

The researchers' conclusion is that one example of disorder, like graffiti or littering, can indeed encourage another, like stealing. Dr Kelling was right. The message for policymakers and police officers is that clearing up graffiti or littering promptly could help fight the spread of crime.


IEA warns of oil shock

Nov 26, 2008

By Robin Chan

AN even worse oil shock could occur in the future if the Organisation of Petroleum Exporting Countries (OPEC) does not keep up investments in oil exploration and production amid the economic crisis, the International Energy Agency has warned.

Mr Nobuo Tanaka, IEA's executive director said on Wednesday: 'If they (Opec) reduce their supply in the future, when demand comes back, when the economy goes back on its trajectory, we may have a serious supply crunch again, maybe more acute than what we saw this year.'

The price of oil soared to a high of US$145 (S$219) a barrel in July as demand far exceeded supply. But this has since come down dramatically to around US$50 as the financial and economic crisis put a dampener on demand.

But as oil prices have come down and companies are hit by tightened credit, there is now concern that oil companies will cut down on their future investments.

Speaking on the sidelines of the launch of the World Energy Outlook 2008 in South-east Asia, Mr Tanaka on Wednesday said the fall of oil to US$50 per barrel is 'alarming.'

He said that this may slow down future investments for non-conventional oil production where costs are higher.

However, he added that production costs for conventional crude oil in the Middle East and Opec countries is much lower and the current price level is enough for them to maintain their production.

'We do not tell Opec how much to produce' Mr Tanaka said. 'What we can say to them is to maintain their level of investment which they plan and commit to and not cancel, not slow down or postpone their investment. That will create another spike when economic growth comes back.'

Mr Tanaka said the low price of oil has given some breathing space for consumer countries.

Asked if he was concerned about deflation next year, a sustained decline in prices during a recession, he said: "Deflation or not, US$50 oil is still a very high price.'

'But we are carefully watching what demand prospects are next year. The current projection is that demand will still grow globally. There will be a very strong decline in OECD countries, but robust growth in China, India and the Middle East will offset this decline. So as a whole we see net increase in demand next year still.'

Wednesday, November 26, 2008

UN calls food summit in 2009

Nov 19, 2008

ROME - THE world should hold a food summit in the first half of next year to seek fairer trade and help farmers in poor countries make a decent living, the head of the United Nations food agency said on Wednesday.

Mr Jacques Diouf, head of the Food and Agriculture Organisation (FAO), said the summit would seek to reform trade, encourage greater food production in developing countries and ensure funding for infrastructure and agricultural productivity.

'I have just put the idea (of holding a food summit) to US President-elect Barack Obama in my message of congratulations,' he told the body's governing conference.

Mr Diouf said he hoped the summit would find $30 billion a year to help boost developing country farm output.

FAO hosted what became an ad hoc food summit in June. That conference, called before a surge in commodity prices, was meant to concentrate on the effect of climate change and biofuel production on food security.

But with the price spike hammering the many developing countries that rely on food imports, the focus shifted to getting emergency help to the hungry. The conference came up with no firm political commitments or policy changes.

The 2008 meeting should 'should lay the ground for a new system of agricultural trade that offers farmers, in developed and developing countries alike, the means of earning a decent living', Mr Diouf said.

The summit would also aim to set up an 'emergency intervention fund' to help farmers in vulnerable countries rapidly increase output when commodity market spikes hit food import bills. Rising prices early this year plunged millions of people into hunger and sparked food riots around the world.

Mr Diouf said a 14 per cent fall in global food prices since July had done little to alleviate the problems.

FAO's food price index was still 51 per cent higher in September than two years earlier. Input prices - such as seeds and fertiliser - had doubled or tripled, he said.

The lower prices did not mean the end of the food crisis but stemmed more from lower demand because of the global economic slowdown, he said.

'What is more, the downturn in prices could lead to reduced food production in 2009/2010, which would result in another food crisis.' -- REUTERS

Now's the time to spend more

Nov 26, 2008

Companies able to invest in a recession will gain market share and come out stronger

By Susan Long
THE public backlash that DBS Bank suffered when it slashed 900 jobs was a classic case of 'first mover disadvantage'.

When times are tough, the first to wield the axe gets all the bad press, says Dr Stewart Black, executive director of the Insead business school's Centre for Human Resources in Asia.

Of course, the bombshell announcement, coupled by the fact that DBS is a national icon and still profitable - it declared a third-quarter net profit of $379 million, albeit 38 per cent less than last year - did not help.

But the 49-year-old says: 'It's almost impossible for outsiders to judge whether a company needed to make such a big cut. They likely considered the negative reception of going first but took the decision anyway.

'Often companies struggle with how much to reveal. The more you open the books, the more you satisfy workers. But it can make customers nervous and can give competitors an advantage.

'So did they reveal too much or too little? And was their response proportionate? Often, you can't tell until way after the fact.'

He says it is not always the case that companies should hang on to all their employees. Of late, there have been calls here to revert to the Eastern or Japanese way of viewing the company as an extended family, and sticking together through thick and thin.

But Dr Black, who spent five years working and living in Japan as a consultant and professor and has visited it extensively since 1978, says: 'Family loyalty served Japan well in the roaring 80s but they were very slow to restructure and get rid of uncompetitive assets and excessive employees after the bubble burst in 1991. It cost 17 years of stagnation.

'You have to ask if the cost of a more dramatic response would have been less costly than the response they took which spread the pain out over 17 years. Would a Western response have inflicted less pain?'

The right response, he says, is probably somewhere in between the American way of slash and burn and the familial orientation of Japan, which protects workers as long as possible.

Before companies reach for the axe, he says they should first do a cost-benefit analysis of how much it will cost to recruit, train, develop and get a replacement worker up to speed.

For a blue-collar worker, studies show that it costs roughly about 30 per cent of his annual salary to achieve this. For a white-collar worker, it costs between 50 to 70 per cent of his annual salary.

'Quite often, companies underestimate this when they reflexively cut people. They are penny-wise, pound-foolish, saving money at the moment only to spend more money in the future.'

Another common mistake firms make is failing to differentiate between high and low performers, and firing en masse. 'Research shows that top performers contribute 40 to 70 per cent more than average performers. It's important to put pressure on low performers but keep your top performers during a recession.'

One way to do that in lean times is through awards and recognition. 'It may be that sales are not as high in a downturn but the company is still doing better than others. In that case, are we celebrating, rewarding, recognising top performers?"

An inexpensive method, he suggests, is an Employee Of The Month competition. The winner gets dinner vouchers, and his picture in the newsletter.

Another way is to offer more flexibility in work hours. 'If you gave employees a choice of working flexible hours or slightly fewer hours, some may take it. They may have childcare or parent-care needs or other things they would be happy to trade 10 hours a week at work for on a temporary basis.

'They won't be able to sustain that in the long term, in terms of income, but it could be welcome flexibility for a while. This will save money, versus forcing everybody to take shorter hours or laying people off.'

Beefing up development opportunities also helps. This can be done through setting up a task force and offering 'temporary assignments', to look at, for example, process improvement, cycle time or customer service. 'This helps employees' development so that when the recovery comes, they have added capabilities and greater opportunities to advance.

'Sometimes taking a step back helps you leap forward. If we take on a new skill, there is a learning curve. A good time to put in that investment is during a recession, so that you're up that learning curve and can gain all the benefits at a time when the economy is recovering. That way, you get acceleration during the recovery, versus a company that waits till the recovery to put in that investment.'

In his past 20 years of researching 50 different companies worldwide, he says over 85 per cent enjoyed a positive return on their investments in marketing, operations and human resources made during recessions.

Now is not the time to cut back but spend more, he urges. 'If companies have strong balance sheets and the liquidity to make investments, there is no better time to gain market share, retool and emerge stronger.

'So far we haven't had a recession last forever. Every recession has been followed by a recovery. If you prepare well for the recovery, you can catch the front of the wave and surf out in front of your competitors.'

Unfortunately, most companies look only at how dire the here-and-now is, and forget that things will get better. So, a bad economy is the best time to hire good talent.

'You can get the best of both worlds by keeping your best people and going out to grab your competitors' best people. Now coming out of the recovery, you're in fantastic shape. You've kept your best people, you've got rid of your worst and you've hired your competitor's best.

'You've made investments so that your learning curve will match the recovery curve. With that, you're firing on all 12 cylinders.'

Additional reporting by Cassandra Chew

Bosses, if you must make cuts, here's what to do

It is better to do your calculations thoroughly and then retrench in one fell swoop, than make multiple cuts as things worsen, says Dr Stewart Black, executive director of the Insead business school's Centre for Human Resources in Asia.

'By the second cut, remaining employees will wonder if they will survive the third or fourth round. The impact is counter-intuitive. Instead of working harder to keep their jobs, they get anxious and lose concentration.'

Because misery loves company, they will spend all their time commiserating in the hallways. Productivity, he warns, will plunge further.


'Employees are human beings first, economic animals second. If you didn't get cut, but your friend does, it's your friendship heart that kicks in first,' he says.

According to research done on car companies where many were let go in the 1980s, for companies where job cuts were perceived to be fair, productivity did not go down or up. At best, there was a neutral effect.

But where people felt their dearly departed were unfairly targeted or treated, they slowed down their work to 'exact revenge'. He says: 'Even though it was not in their own economic interest to do that, people's hearts obviously won over their heads.'

As such, the 'why' and 'how' of retrenchment becomes paramount. 'Was it because the person was of lower seniority or belonged to a poor performing unit? Was there prior consultation or did they just come in one morning and get escorted out by security?'

If a company is seen to be reasonable, even if not generous, productivity goes back to neutral. 'Quite frankly, neutral is good. In a slowdown, the last thing you can afford is any further drop in productivity.'


'Like a sports team, you need to inspire the survivors to fight on. When you are losing, many players feel like mentally and emotionally giving up. Once they do, the game is over,' he says.

'However, the rally cry must be based on reality. If you are down by 50 points in basketball with one minute to play, promising the players they can win the game if they try just doesn't ring true.'

In some business cases, the goals need to be more realistic.

'For example, General Motors recently announced that for it, winning would be surviving the next two years. For many companies, winning could be just surviving. In other cases, you can help employees see that the actions being taken now can help the company emerge from the recession even stronger.'

'If you've never invested in employees in past downturns, don't pretend to start now. Do it only if you are serious. A while ago, companies seized on participative management. They went around asking employees for opinions but ignored it. They raised expectations, then dashed them. They would have been better off never asking for input rather than asking for it and then ignoring it.'

'In both good times and bad, companies with strong cultures, like Disney, Shell and BASF, have low staff turnovers. One of the things to think about is how do I enhance my working environment such that even if my employees have portable skills, the benefit of moving to a new employer isn't worth the cost of losing the company-specific culture. Studies show that a 10 to 20 per cent pay differential can be offset with a good company culture. Now, lots of people will leave for a 50 per cent pay raise. But companies are not losing most of their people to 50 per cent more, they're losing them to 10 to 20 per cent salary increases.'

Tuesday, November 25, 2008

The Truman syndrome

Nov 25, 2008

NEW YORK - ONE man showed up at a federal building, asking for release from the reality show he was sure was being made of his life.

Another was convinced his every move was secretly being filmed for a TV contest. A third believed everything - the news, his psychiatrists, the drugs they prescribed - was part of a phony, stage-set world with him as the involuntary star, like the 1998 movie The Truman Show.

Researchers have begun documenting what they dub the 'Truman syndrome,' a delusion afflicting people who are convinced that their lives are secretly playing out on a reality TV show.

Scientists say the disorder underscores the influence pop culture can have on mental conditions.

'The question is really: Is this just a new twist on an old paranoid or grandiose delusion ... or is there sort of a perfect storm of the culture we're in, in which fame holds such high value?' said Dr Joel Gold, a psychiatrist affiliated with New York's Bellevue Hospital.

Over a two-year period, Dr Gold encountered five patients with delusions related to reality TV. Several of them specifically mentioned The Truman Show.

Dr Gold and his brother, a psychologist, started presenting their observations at medical schools in 2006. After word spread beyond medical circles this summer, they learned of about 50 more people with similar symptoms. The brothers are now working on a scholarly paper.

Meanwhile, researchers in London described a 'Truman syndrome' patient in the British Journal of Psychiatry in August. The 26-year-old postman 'had a sense the world was slightly unreal, as if he was the eponymous hero in the film', the researchers wrote.

The Oscar-nominated movie stars Jim Carrey as Truman Burbank. He leads a merrily uneventful life until he realises his friends and family are actors, his seaside town is a TV sound stage and every moment of his life has been broadcast.

His struggle to sort out reality and illusion is heartwarming, but researchers say it's often horrifying for 'Truman syndrome' patients.

A few take pride in their imagined celebrity, but many are deeply upset at what feels like an Orwellian invasion of privacy.

The man profiled in the British journal was diagnosed with schizophrenia and is unable to work. One of Dr Gold's patients planned to commit suicide if he couldn't leave his supposed reality show.

Delusions can be a symptom of various psychiatric illnesses, as well as neurological conditions such as Parkinson's and Alzheimer's diseases. Some drugs also can make people delusional.

It's not unusual for psychiatrists to see delusional patients who believe their relatives have been replaced by impostors or who think figures in their lives are taking on multiple disguises.

But 'Truman' delusions are more sweeping, involving not just some associates but society at large, Dr Gold said.

Delusions tend to be classified by broad categories, such as the belief that one is being persecuted, but research has shown culture and technology can also affect them. Several recent studies have chronicled delusions entwined with the Internet such as a patient in Austria who believed she had become a walking webcam.

Reality television may help such patients convince themselves their experiences are plausible, according to the Austrian woman's psychiatrists, writing in the journal Psychopathology in 2004.

Philosophy and psychology professor Ian Gold of McGill University in Montreal who has researched the matter with his brother, suggests reality TV and the Web, with their ability to make strangers into intimates, may compound psychological pressure on people who have underlying problems dealing with others.

That's not to say reality shows make healthy people delusional, 'but, at the very least, it seems possible to me that people who would become ill are becoming ill quicker or in a different way', Prof Ian Gold said.

Other researchers aren't convinced, but still find the 'Truman syndrome' an interesting example of the connection between culture and mental health.

Psychologist Vaughan Bell, who has researched Internet-related delusions, said one of his own former patients believed he was in the virtual-reality universe portrayed in the 1999 blockbuster The Matrix.

'I don't think that popular culture causes delusions,' said Dr Bell, who is affiliated with King's College London and the Universidad de Antioquia in Medellin, Colombia.

'But I do think that it is only possible to fully understand delusions and psychosis in light of our wider culture.' -- AP

The longest crisis ever?

Nov 22, 2008

By Zakir Hussain

IT IS official: Singapore is in recession. As an open economy, Singapore's economic fortunes are closely intertwined with that of the wider world. When its major trading partners - America and the European Union - plunged into recession in recent weeks, Singapore followed suit.

In previous recessions - in 1985, 1998, and 2001 to 2003, the economy bounced back relatively quickly because conditions elsewhere improved. It also helped that during those downturns, only certain sectors or regions were badly hit.

This is not the case now. Economists note that during the 1998 Asian financial crisis, affected countries accounted for only 10 per cent of global gross domestic product (GDP). Today, they account for 50 per cent of global GDP.

The effects of the crisis, which some believe is the worst since the Great Depression of the 1930s, have yet to play out fully, here and elsewhere in the world.

Insight looks at what caused past downturns, how the economy recovered, and why this crisis is set to be a long one.

1985: Partly 'self-inflicted'

SINCE independence, Singapore's growth has largely been subject to the ebbs and flows of global trade swings.

So it was no surprise that a slump in world trade in 1985, especially with the United States, saw the economy contract for the first time since independence.

Gross domestic product shrank 1.4 per cent, when it grew 8.3 per cent in 1984.

Exports to the US rose only 3 per cent, compared to 50 per cent and 23 per cent in the previous two years.

Over a year, electronics production - one-quarter of the country's manufacturing output - decreased by 15 per cent, exposing the danger of excessive concentration in a few sectors.

Demand was also dampened by low commodity prices in key trading partners Malaysia and Indonesia.

It did not help that wages and business costs were deliberately high.

By the late 1970s, the Government had wanted the economy to move out of low-wage, labour-intensive activity into higher-skilled, technology-intensive manufacturing and services, in order to make the economy less vulnerable to trade competition and protectionist restrictions elsewhere.

Policymakers believed that if companies faced higher costs, they would be spurred to automate and mechanise their work and add value to the economy.

They also noted how higher wages in other economies saw productivity gains.

However, wage increases outpaced productivity gains in the early 1980s.

The Government also stuck by its policy of letting the Singapore dollar appreciate.

As a result, exports became less competitive and took a beating when world trade slumped.

Nanyang Technological University economist Choy Keen Meng notes that the crisis was 'partly inflicted on ourselves'.

'Costs were too high, construction was overextended, and when the bubble burst, that affected us,' he tells Insight.

The toll: 90,000 jobs, two-thirds of which involved foreign workers who were sent home. Unemployment hit 6 per cent.

The Government acted to reduce labour costs by slashing employers' Central Provident Fund contribution rates.

In 1986, the employers' CPF contribution rate was slashed from 25 per cent to 10 per cent, effectively cutting wages by 12 per cent.

Since then, the CPF rates have been used again and again as an economic tool during a recession to reduce wage costs.

But that year, other developed countries were not doing too badly, and this healthy external environment meant Singapore was able to export its way out of the crisis.

The economy recovered, growing 2.1 per cent in 1986 and 9.8 per cent in 1987.

Assistant Professor Choy's take is that while the cost cuts helped, the external environment was 'absolutely critical' to recovery.

'We are a small, open economy and our growth is driven by external factors like export demand. Our business cycles are transmitted from the rest of the world,' he says.

'We also recover because external conditions pick up.'

1998: Like a plane with two engines left

AT THE height of the Asian financial crisis in 1998, The Economist newspaper compared the world economy to 'an aeroplane that has lost two of its four engines, with a third now starting to splutter'.

Japan was in a recession, China was sharply slowing down, many emerging Asian economies were going through their steepest economic declines since World War II.

Economists made gloomy predictions that if the economies of America or Europe slowed too, the world economy could suffer its worst peacetime setback since the Great Depression of the 1930s.

Fortunately, this did not come to pass.

Not long after the aeroplane nosedived, some engine repair in mid-air saw the plane pick up speed and soar, propelled by the other engines - America and Europe.

The plunge began in mid-1997, when a fall in the value of the Thai baht sparked turmoil that hit Indonesia, Malaysia, the Philippines and South Korea hard. The contagion spread as far as Russia and Brazil.

Problems like excessive foreign borrowing or unsound banks dragged regional economies down, and Singapore, with its extensive trade and financial links, took a heavy beating.

With Asian countries accounting for over 50 per cent of Singapore's trade, economic growth plunged from 8.3 per cent in 1997 to -1.4 per cent in 1998.

Explained economics professor Augustine Tan in a 1999 article: 'Singapore is South-east Asia's entrepot. The region is also a major market for Singapore's exports of services, especially in the areas of tourism and finance.

'It is easy to see why Singapore suffered when the financially-crippled Asian countries drastically reduced their imports.' Prof Tan is now with the Singapore Management University.

It did not help that investors fled and kept away from the region.

That the West was relatively unaffected proved a boon for Singapore, Nanyang Technological University economist Chew Soon Beng tells Insight.

He notes that the Singapore dollar's depreciation against the US dollar by 18 per cent then gave Singapore's exports to developed countries a lift.

And as the Singapore dollar appreciated against the currencies of its Asean trading partners, imports became cheaper for Singaporeans.

The Government also unveiled a $10.5 billion aid package to alleviate the burden on households, and offered tax rebates.

Wage cuts also played a role - the employers' Central Provident Fund contribution rate, which had been progressively restored to 20 per cent by 1994, was again slashed to 10 per cent. It was later progressively restored in 1999 and 2000, to 16 per cent.

Subsequently, the National Wages Council encouraged a monthly variable component for pay to enable firms to adjust labour costs quickly and effectively.

The healthy external environment, coupled with domestic measures, enabled the economy to get out of the crisis rather fast, Prof Chew says.

By 1999, growth reached 7.2 per cent, helped by a spike in demand for electronics worldwide. In 2000, growth was 10.1 per cent.

2001-2003: bust, Sept 11 and Sars

PLANES hijacked by terrorists and crashed into New York's World Trade Centre on Sept 11, 2001, sent the United States and global economies reeling.

The bubble had already burst a year earlier, as many Internet start-ups in the US folded one by one, causing global demand to drop.

Economists who predicted a hard landing for the US economy did not expect the rest of the world to follow suit.

IT and electronics manufacturers were hit hard, and stock markets throughout the world collapsed, dampening spending and sending the world into a recession by mid-2001.

Said Mr Stephen Roach, chief economist at US investment bank Morgan Stanley, then: 'The loss of the US economic leadership reverberated quickly around the world. There was no other candidate to fill the void.

'Once that engine screeched to a standstill, the rest of the world tumbled like dominoes, first non-Japan Asia, then Japan, America's Nafta (North American Free Trade Agreement) partners, and Europe and Latin America.'

The key factor? Global dependence on the US, which Mr Roach reckoned accounted for two-fifths of world gross domestic product (GDP) growth over the previous five years by sucking in imports from other countries.

Supply chains had also become increasingly globalised as companies from developed economies outsourced production to cheaper destinations in Asia.

Fortunately, China's growth barely slowed, while Hong Kong, Singapore, Taiwan and Malaysia suffered full-blown recessions.

Singapore's economy, which had grown 10.1 per cent in 2000, shrank by 2.4 per cent in 2001. The Government moved to stimulate it.

In July 2001, a $2.2 billion package was announced to ease business costs, including rebates on taxes and rentals.

In October 2001, the Government provided another boost: an $11.3 billion help package that included tax cuts and emergency cash for the poor and jobless. The building of public infrastructure was also hastened to stimulate the economy.

Says Nanyang Technological University Assistant Professor Choy Keen Meng: 'What the Government does is mainly to alleviate domestic pain, stave off retrenchments, tide lower-income workers through bad times. But there's very little we can do to stimulate growth.

'As in past crises, we recovered only when the rest of the world recovered.'

But just as the economy was finding its feet in 2003, the severe acute respiratory syndrome (Sars) epidemic struck. The tourism, travel and services sectors, which together accounted for more than 60 per cent of GDP and 75 per cent of jobs, were hit hard as visitors stayed away and confidence dipped.

The Government poured $230 million into a Sars relief package for the travel and tourism sectors.

The recovery came swiftly, however.

Prof Chew Soon Beng of NTU notes that Sars affected mainly five cities: Singapore, Hong Kong, Taipei, Beijing and Toronto. 'Singapore was affected the most as we did not have a domestic market,' he says.

The resident unemployment rate hit a high of 5.2 per cent, as some big corporations retrenched workers.

Still, the economy, which grew 4.2 per cent in 2002, hummed at 3.5 per cent in 2003 - lower than its Asean trading partners - before bouncing back to 9 per cent in 2004.

2008-2009: A bumpy ride, but opportunities exist

FOR the first time in 60 years, the economies of developed countries are set to shrink overall next year.

The International Monetary Fund (IMF) in its latest forecast this month predicts overall growth in places like the United States, Europe and Japan to shrink by 0.3 per cent then.

Over a third of Singapore's exports are bound for these markets.

Well over half of exports are also bound for Asia, but demand there is also on the decline.

The IMF projects global growth will dip from 3.75 per cent this year to just over 2 per cent next year.

The prospects are bleak indeed.

Economist Shandre Thangavelu of the National University of Singapore's economics department notes that during the Asian financial crisis 10 years ago, Singapore could export its way out to economies like the US and China.

'This time, globally, we can't find any growth bowl where we can export our way out,' he says.

'It's very hard to see when the bottom is going to come, and when it does, we'll probably stay there for a while.'

Said Morgan Stanley's Stephen Roach recently: 'The recovery in the global economy is going to have a big, wide bottom and then a very gradual up-slope in 2010 or 2011 - an anaemic recovery.'

But he noted that Asia would come out better than the rest of the world.

Even so, the latest trade figures for Singapore give little room for optimism.

Last month alone, Singapore's non-oil domestic exports to key markets declined sharply - exports to the US fell by 31 per cent, to the European Union by 14 per cent, to Malaysia by 13 per cent and to China by 9 per cent. Overall, they fell by 15 per cent.

NTU's Choy Keen Meng says one factor is that many of the exports are further processed in the region to cater to eventual demand in the US and Europe.

'We have no buffers, no offsetting pockets of strength, with all markets slowing down together,' he says.

'If this slowdown had not been so synchronised, if China and India had been holding up the fort, we could see 0 to 2 per cent growth next year. Now it's certainly flat or negative growth.'

China is forecast to grow 9.7 per cent this year, but the IMF predicts this will fall to 8.5 per cent next year.

In Chinese terms, this is however close to zero growth, as the economy needs to grow at least 6 to 8 per cent a year to absorb population growth, surplus agricultural labour and maintain expectations of a rise in income for social stability.

This month, the Chinese government announced a 4 trillion yuan (S$896 billion) stimulus plan to boost growth and ward off the global slump, with the money going to infrastructure projects such as low-rent housing, roads and railways.

India's growth is forecast at 7.8 per cent this year, and 6.3 per cent next year.

Growth in the five biggest Asean economies - Indonesia, Malaysia, Thailand, the Philippines and Vietnam - is forecast at 4.2 per cent next year.

Professor Ilian Mihov, an economist at graduate business school Insead, points out that most economists believe the growth rate in world GDP next year 'will be delivered predominantly, if not exclusively, by Asia'.

'Even though we see some flows out of the region, these outflows are not driven by lack of confidence but by simple liquidity needs of US banks and financial institutions,' he adds.

He feels that with aggressive and well-coordinated policies, the world may start seeing recovery signs by mid-2009.

These policies include expanding liquidity in the US, a resuscitation of the financial sector and fiscal stimulus by the US and other governments to up spending and boost expectations for the future.

'Without these, the recession may last 18 months or longer.'

But Associate Professor Thangavelu says that for a small, open economy like Singapore's, fiscal stimulus and domestic spending alone will help but are not enough for recovery.

What can be done is to grow productivity and train workers to prepare for when the rebound comes, and to explore growth areas for small and medium enterprises to ride out the recession.

One area worth working on, he feels, is trade within Asean countries.

'Asean is quite a big market, and although its growth is linked to external demand, this is a good time to find areas of growth within Asean itself as much as we try to couple ourselves with China and India,' he says.

'Strong entrepreneurs emerge during a downturn,' he adds.

One growth area, economists note, can be the education and retraining sector.

Prof Thangavelu notes that the opportunity cost of training during a downturn is much lower, especially for those who are laid off.

Although Singapore cannot do much to get out of recession in a crisis like this, Prof Chew Soon Beng of NTU notes that Singapore's strong reserves and stable currency can help it to make key adjustments at home.

For example, the public sector can employ more temporary staff to do work like field surveys.

Local and government-linked companies can look out for good investments abroad, but he feels they should first expand their operations here to protect the social fabric.

'When people are unemployed in Singapore and business elsewhere is weak, why not develop extra capital locally?' he says.

'Crisis means opportunity,' he adds.

'If we have less retrenchment and more training than other countries, when the world recovers, we will be the first to benefit.

'There are also firms still looking for investment. As our society is more stable, reliable and focused, we can still attract foreign investment during this global crisis.'

Civil service to cut pay

Nov 24, 2008

* Half-month less year-end bonus for 2008
* Ministers' pay and MPs' allowance to be slashed
* Top civil servants' pay to be cut by 11 - 19%

By Li Xueying

AMID a darkening economic outlook, cabinet ministers and senior civil servants would see their pay packets next year shrink by up to 19 per cent- with the President and the Prime Minister taking the biggest hit.

This is even as a planned salary increase is deferred.

Meanwhile, all civil servants across the board would get one month less bonus this year, as compared to last year.

In a statement yesterday, the Public Service Division (PSD), which oversees civil service matters, pointed to the slowdown in the global economy and in Singapore as the reason for these moves.

The top government officials - political leaders, administrative officers (AOs), judicial and statutory appointees - will feel the pain on two fronts:

First, a cut in their GDP Bonus, which is linked to Singapore's gross domestic product growth. This comprises a 'significant portion' - close to 25 per cent - of their annual salaries.

'With a weak economy, these components will automatically fall,' said the PSD.

This means a fall in total pay packets of 11 per cent to 19 per cent. The more senior the officials, the deeper the cut.

At the top, there will be a 19 per cent fall in the annual salaries of President S R Nathan (to $3.14 million) and Prime Minister Lee Hsien Loong (to $3.04 million).

Senior permanent secretaries and entry-grade ministers at the MR4 grade would take a 18 per cent cut (to $1.57 million).

AOs at the entry superscale grade of SR9 - these are usually top-performing AOs in their early or mid 30s, and directors in ministries - would see their packets drop 12 per cent (to $353,000).

Also not spared are the Members of Parliament, whose allowance would fall by 16 per cent (to $190,000).

Second, a planned move to adjust upwards the salaries of the ministers and permanent secretaries at the MR4 grade has been postponed.

In April last year, the Government had announced that it intended to adjust their annual salaries from 77 per cent to 88 per cent of the private-sector benchmark by the end of this year.

This is now deferred.

Instead, their pay packets are now at 56 per cent of the benchmark, which is set at two-thirds of the median pay of the top eight earners in each of six sectors such as banking and engineering.

On when the adjustment would eventually take place, the PSD told The Straits Times: 'When the economy recovers and private-sector salaries increase, civil service salaries will have to move up too in order to remain competitive with the private sector.'

Monday, November 24, 2008

Mufti wants desegregated worship/Fatwa forbidding yoga

Nov 24, 2008

Mufti wants desegregated worship

MELBOURNE: Australia's Mufti, the highest Islamic authority, said he wants to end segregation of men and women in mosques.

Sheikh Fehmi Naji el-Imam said he would put his proposal to the next meeting of the Australian National Imams Council and consider how women could share the room with men during prayers.

He said segregated worship was introduced long ago, as a cultural change, not a religious one, and he would argue to end it.

His comments, reported in Australia's The Age newspaper, were seen as a response to Muslim women's anger at 'entrenched discrimination'.

'It is good to hear the complaints of the sisters, and to try to find some solution to their concerns,' he said. 'My duty is to propose, to discuss and try to convince. I can't guarantee the outcome.'

His announcement is likely to attract international attention and may spark fierce debate among highly conservative mosque communities within Australia.

In some mosques overseas, there are no physical barriers between men and women's areas but in Australia almost every mosque separates them.

Sydney lecturer Jamila Hussain last Thursday had told a conference at the National Centre for Excellence in Islamic Studies here that women found facilities at some mosques 'insulting' and that they were treated as second-class citizens.

She welcomed Sheikh Fehmi's promise to try to end segregation.

Ms Jamila, who studied Sydney mosques, said that in some, women had to pray in the yard under a blazing sun while men enjoyed the cool interior, or to pray in a kitchen between stoves and sinks, or in a tent in full view of a pub across the road.


[Comment: Positive and forward moving. Hope it leads to the right response. But I'm not optimistic. Meanwhile Malaysia's islamic authority has declared yoga haram.]

Nov 24, 2008

Fatwa forbidding yoga comes under fire

Hindus 'disturbed' by Muslim council move; critics say it will create division

KUALA LUMPUR: Yoga practitioners and moderate Muslim groups have criticised a decision by Malaysia's National Fatwa Council to declare yoga haram, or forbidden, for Muslims.

Sisters in Islam (SIS) programme manager Norhayati Kaprawi says many Muslims in Malaysia practise yoga as a form of exercise to stay healthy.

She said: 'I don't think it has caused any Muslim to convert to Hinduism; neither has it weakened their faith. It's just an exercise like qigong or taiji.'

Ms Norhayati said that by issuing the edict, the council had acted as if yoga were a widespread threat to Islam.

'I hope they can focus their attention on bigger and more pressing issues, such as money politics and corruption,' she said.

SIS has been holding weekly yoga classes for staff for the past year. It has no problem continuing with it, said Ms Norhayati.

The Fatwa Council, Malaysia's top Islamic body, issued a fatwa (religious edict) last Saturday banning Muslims from practising yoga on the grounds that it involves chants and acts of worship in order to be one with the god of another religion.

Chairman Abdul Shukor Husin said that while merely going through the motions of various yoga postures may not be wrong in Islam, the council believed the practice was best avoided altogether as 'one thing would lead to another'.

But 'many Hindus have been deeply disturbed by the Fatwa Council's announcement,' Malaysia Hindu Sangam president A. Vaithilingam said in a statement released yesterday.

He said it was regrettable that the council had not consulted the Malaysia Hindu Sangam - an association which oversees Hindu affairs - so the religious and non-religious aspects of yoga could be explained.

He added that as many Hindus and non-Hindus practise yoga together in a non-religious manner, the fatwa could drive a wedge between those of different religions.

But it is not just the council which opposes yoga. Some Christian groups frown on the practice for similar religious reasons, said a spokesman for the Malaysian Council of Churches.

Separately, veteran opposition lawmaker Lim Kit Siang said the edict showed Malaysia was heading towards a conservative type of Islam which could divide the multiracial country.

Recently, the council also issued an edict against tomboys, ruling that girls who act like boys violate the tenets of Islam.

'It is sending a most unfortunate message that Malaysia, instead of moving towards a moderate and universal Islam, is moving towards an opposite direction which will create division,' Mr Lim told AFP.

Rulings by the Fatwa Council are not legally binding on the country's Muslims, but it is an enormously influential body.

Ms M. Revathi, 40, who has been teaching yoga part-time for about 10 years, said some people mistake the names of the asanas (postures) as religious verses as they are in Sanskrit. 'But there's nothing religious about the names,' she said.

She added: 'As for the meditation part, it's not religious either. I tell my students to relax and free their minds, and they can meditate in whatever language they like.'


Unions hamper US car industry

Nov 24, 2008

By Tion Kwa

SHOULD American taxpayers bail out their car industry? In different circumstances, the answer would be simple: No. But these aren't normal times. The United States has probably entered a punishing recession; job losses are already mounting. If any of the Big Three carmakers fail, the effect would ripple across the American economic landscape.

So despite the considerable forces arrayed against a bailout, it's likely that the car industry will receive a handout - eventually. Maybe next month - carmakers have been told to submit restructuring plans to Congress next week. Or it might happen in January, when a new Congress will convene and a new president sworn in.

But whenever the money comes, it would be useful if Congress applied its new-found leverage to wring concessions from the Big Three that would have been impossible to get in normal times. To prevent bankruptcy in the industry, Congress should want to write in changes that might have come out of any bankruptcy restructuring. Principally, the opportunity lies in unclasping organised labour's fingers from the throat of the US auto industry.

Conventional wisdom is that American carmakers are dinosaurs. This view is not just found overseas, but resonates with many Americans too, as they steadily gravitate towards Japanese, European and Korean brands. American lawmakers opposed to a bailout accuse Detroit of failing to invest in research to develop fuel-efficient engines that pollute less, and of failing to build better cars, plain and simple.

The Big Three - General Motors, Ford and Chrysler - make cars that are badly styled, poorly put together and use technology more appropriate to an earlier age.

True, true and true - but also not true.

At a car dealer's forecourt in the US, many prejudices against American cars are borne out. But at the Big Three's dealerships in Singapore, Europe and elsewhere, starkly different cars rarely seen in the US are on offer. For example, GM's European division has a long history of developing well-regarded cars under the Opel badge, which are sold internationally. The same goes for Ford in Europe. Meanwhile, Ford also owns Volvo cars, GM owns Saab and so on.

Either through wholly owned subsidiaries, partial ownership in other companies, joint-ventures or special arrangements, the Big Three either own or have access to some of the most innovative technology in modern carmaking. But little of that makes it into an American car.

The main reason is the car workers' union. With average hourly wages for a unionised worker as much as US$70 (S$107) after factoring in pension and other benefits, carmakers can't afford to produce only relatively inexpensive cars with complex engineering at home. Neither can they import more from foreign subsidiaries to replace domestic models. This will only lead to strife with protectionist labour groups.

Consequently, US domestic production has concentrated heavily on SUVs and pickup trucks - vehicles that sell on the strength of their size, not on the basis of innovations that would allow for smaller engines using less fuel to squeeze out more power. Big vehicles using old technology equal bigger margins.

Indeed, the difficulty of making money out of producing cars has pushed American carmakers to tweak their business model. They make money not just from selling cars, but more and more by lending money to dealers to maintain inventory and by competing with banks to finance car sales. Cars became a way to access a new line of business, the consumer lending market. Financial services increasingly have become a significant part of their business.

Put all this together and it is not hard to see why the auto industry has been so badly hit in the financial and economic crisis.

Car sales are down because of higher fuel prices earlier this year and consumer pessimism. At the same time, automakers' financing units have suffered the same squeeze as the rest of the financial industry. People are finding car loans and lease payments difficult to make. And cars returned at the end of lease periods pile up as the second-hand market is just as adversely affected as new car sales. So, not only are automakers being affected by the problem of selling cars, they are suffering at first hand the difficulties of the financial industry.

If Congress is serious about helping the US auto industry, it has to take a hard look at the one area that causes American domestic carmakers to lose their competitive edge: the car workers' union.

Without the union, Detroit's carmakers would be very different companies altogether. More cars developed overseas would be built domestically, such as Ford's Focus; or there would be more imports like GM's Astra, sold by its Saturn subsidiary.

If - more likely, when - a lifeline is extended to Detroit, it should come with the demand - and therefore the implicit backing and cover - for automakers to make big adjustments to existing union contracts covering hourly wages and benefits, like health-care costs and retirement expenses. Doing this would allow Detroit to take its business in the same direction within the US as it does overseas.

The question is whether Democrats - who have been most keen to bail out Detroit - are willing to take it one step further. This would bring the Republicans on board. Nevertheless, it would also alienate organised labour, with which Democrats have a longstanding, cosy relationship. But failing to do this, a chance arising from the current economic crisis to fundamentally turn around the US domestic car industry will be lost. And the circumstances giving rise to this opportunity are not something anyone wishes to see again.

[Comment: This is a time to bite the bullet and make the US auto industry competitive again. The costs is crippling the future of Detroit. The bosses need to show the numbers to the workers. And explain why it cannot go on. If they Union won't let go, the industry will be in its death grip and there will be no future.]

Friday, November 21, 2008

Court frees man who ran gaming den

Nov 21, 2008

Sentence of at least 1 1/2 years of reformative training too long: CJ

By Khushwant Singh

THE High Court has overturned an earlier decision that ordered a young man to spend at least 1 1/2 years in a centre for youthful offenders for running a gaming den.

Chief Justice Chan Sek Keong yesterday ordered Johnny Ong, 21, to be released today after nearly two months in detention.

He said the original sentence was too long because had Ong, aged 20 at the time of his arrest, been just a couple of months older, he would have faced a fine or several months in jail.

But his age made him eligible for reformative training, which is meant to rehabilitate young offenders.

Ong was arrested in May at an illegal casino in Lorong 17, Geylang. He had been paid $70 a day as a cashier at the gaming den.

He pleaded guilty in a district court and was to be considered for probation, but he missed an interview with an official.

Ong was then found suitable for the Reformative Training Centre (RTC).

There, offenders aged 16 to 21 live in a boot camp-like environment and undergo foot drills, counselling and education. Prisoners serve a minimum sentence of 11/2 years, which can be extended up to three years.

Ong appeared in the High Court yesterday, without a lawyer, looking to overturn the decision and serve a short jail sentence instead.

Through a Mandarin interpreter, he said his sentence was excessive and requested more time to post bail and seek legal aid for a lawyer to argue his appeal.

CJ Chan then heard Deputy Public Prosecutor Francis Ng argue that Ong had ample time to do this before the hearing.

Ong, who had only primary school education, was at risk of returning to crime, and courses at the RTC would equip him with skills that would serve him well later in life, DPP Ng said.

But CJ Chan decided that Ong had been punished enough. He also questioned what training Ong would get behind bars, and called on prosecutors to provide details at future hearings.

'It's called reformative training...but the court does not know what it will teach him.'

The Chief Justice also pointed out that this was Ong's first brush with the law. Ong had also told police that he needed to work to support his sickly mother.

Ong's mother, who was in court, told reporters that she was very happy to have her son come home. Her husband died five years ago.

She said Ong felt ashamed for breaking the law and for not being able to take care of her.

[Common sense triumphs. It was his first brush with the law and he was a cashier at an illegal gambling den. What he did was no different from what hundreds of others would be doing when the casinos open. The only difference being those casinos would be legal ones. In terms of criminal activity, his crime is a statutory one. He should not have been sentenced to reformative training in the first place as it was his first charge. Good thing he faced a clear-minded CJ.]

Self-cleaning coating can cut buildings' washing bills

Nov 21, 2008

By Amresh Gunasingham

A LOCAL company has started mass producing a special coating for outdoor paint that it says can automatically remove mildew and fungus.

Local paint distributor Haruna, in conjunction with the Agency for Science, Technology and Research (A*Star), unveiled the film yesterday.

The coating, called photocatalytic titanium dioxide, is applied on top of paint and could save places such as shopping malls thousands of dollars a year in cleaning bills.

When exposed to ultraviolet rays from the sun, the film reacts with oxygen in the air to repel the mould, fungus and bacteria that normally cling to surfaces.

It also provides a protective layer against dust, dirt and exhaust fumes, allowing the grime to be easily washed away, said Haruna director Yukio Yanase.

The compound was developed by scientists from A*Star, who yesterday signed an agreement with Haruna to mass produce it locally.

Mr Lee Han Boon, vice-president of commercialisation at Exploit Technologies - the commercialisation arm of A*Star - said the film would be a boon for buildings here, especially expensive-to-clean skyscrapers.

Haruna has already had some success, selling the self-cleaning coating to Pacific Plaza in Scotts Road.

Titanium dioxide can reduce the frequency of washings, driving down the cost of building maintenance by up to $150,000 per year, said Mr Matthew Bey, chief executive of Vision Facade Solutions, the mall's building maintenance operator.

He said a one-time application of the coating can cost up to $25,000 more than conventional coating methods. But he said the 'long-term cost savings' make it a worthwhile investment.

The signing ceremony took place at A*Star's TechLicensing Fair on Energy and Environment yesterday. The fair, the third of its kind held this year, showcases intellectual property and emerging technology from A*Star and around the world.

[Comment: So are our journalists critical enough to ask questions like "Are there any potential health effects of titanium dioxide on humans, animals and the environment?"]

There's reason to be optimistic

Nov 21, 2008

By Heng Siam Heng

IN THE midst of deepening crises in the world's major financial markets, some say we are hearing echoes of the Great Depression of the 1930s. The D-word has occurred with increasing frequency in the media. Even United States President George W. Bush said at the conclusion of the G-20 financial summit last weekend that it was conceivable that the US could suffer a depression worse than the Great Depression.

There is little doubt that the US and many other countries are in recession. But depression? Most likely not. There are many reasons why we should see the glass as half-full - and not shattered - and focus our minds on relieving the pain inflicted by the recession.

First, the post-World War II system of economic governance, in both the developed and developing world, is better equipped to deal with downturns than were the governments of the 1930s. John Maynard Keynes, most eminently, provided the theoretical tools for this system of governance - and fortunately, as Richard Nixon put it in the 1970s, we are all Keynesians now, whatever our other ideological preferences.

One policy instrument of Keynesianism is anti-cyclical government spending. The other is the central bank acting as the lender of last resort. Governments have brought both instruments into play in the current crisis.

The second reason for optimism has to do with the flow of credit. It has dropped dramatically, for sure, driving up costs of short-term loans, and threatening what The Economist has called 'a global financial heart attack'.

But the world is not short of liquidity. In fact, the opposite is true. Before the crisis, the market was awash with money. What is crucially in short supply now is not so much liquidity as trust in the financial system.

It is good that central banks have got together to coordinate measures to restore trust and confidence in the financial system. Though politically unpopular, governments have acted decisively to bail out crucial financial institutions so as to prevent a financial meltdown. And they can go further. The West for one should drop its ideologically-inspired objection to sovereign wealth funds acquiring Western assets.

For the first time, the West is conceding to emerging economies some of its primacy in the global economy. Emerging economies have been asked to play the role of white knights to rescue the global economy. And they can do so because, thanks to the lessons they learnt in the Asian Financial Crisis of 1997 to 1998, they are by and large in reasonable macro-economic health.

China, especially, has the potential to play a positive role in the current crisis. It has US$2 trillion (S$3.05 trillion) of foreign reserves, a current account surplus, and (thank goodness) has not been fully integrated into the international financial system. It can pump money to stimulate its domestic economy. Its growth will support commodity prices. Both India and Brazil also have plenty of foreign reserves to tide over this difficult period. Russia has US$550 billion of reserves.

Another reason for optimism can be found in the supply chain process pioneered by the electronic business. The relationship between inventories and the business cycles was once a complex one. It has become less so because supply chain management now supports a production schedule where goods are made to order. As a result, inventories are minimal, if not zero.

In the event of an economic downturn, firms need no longer be saddled with inventories of raw materials and finished products to trim. Though demand may be lower, they will continue buying raw materials from their suppliers in order to produce goods for their customers. Their suppliers would not suddenly lose a huge chunk of business; they would earn less profit, certainly, but they would have time to adjust.

Just-in-time production and consumption has lowered economic volatility. In the old economy, firms would drastically cut orders from their suppliers, preferring to use up their inventories first. The fact that that is no longer the case should provide a breather.

The final reason for optimism can be found in the longue duree of history. Economic crises were often the result of wars and natural disasters as well as political misrule. The good news is that most parts of the world today enjoy peace. We are far from the situation which existed in the late 1920s and 1930s. Europe was emerging then from the devastation of World War I and was driven by its unresolved problems into World War II.

The mess originating in Wall Street is a manifestation of deep-seated problems: budget deficits, current account deficits, and huge public and private debts. Until recently, these problems were explained away by market fundamentalists. In one fell stroke, the meltdown has reduced the economic power of the US and the intellectual influence of its free marketeers.

Many have spoken of an inevitable shift, from the West to the East, of the global economic centre of gravity. The year 2008 will go down in history as an important milestone in that shift. The mighty dollar looks set to share its role as a global currency with the euro. The powerful West would do well to accommodate the rise of the rest.

Like it or not, we are now in a multilateral world.

The writer is a Senior Research Fellow at the East Asian Institute, National University of Singapore