Friday, December 30, 2011

Hawker Stories

Dec 25, 2011
The first-generation hawker: A master of heritage food

At just $1.20, hawker Chee Hua Pheow's stir-fried glutinous rice is easily among the cheapest meals sold at Chinatown's Smith Street Food Centre, and possibly island-wide too.

Mr Chee, 62, has kept the price of his hearty traditional fare the same in the last three years despite rising food costs.

This year, with the price of rice and oil going up, the bill for his ingredients has increased by some 30 per cent.

Yet the owner of Niu Che Shui Famous Glutinous Rice refuses to raise his price.

'All my customers are regulars and the least I can do to thank them for their support over the last 40 years is to keep the price low,' he said. 'As long as I can make ends meet, it is okay.'

Mr Chee, whose brother-in-law helps out at the stall, has been able to bring home more than $2,000 every month because of the low rent he pays as a subsidised hawker: $320 a month.

He said in Mandarin: 'People in their 20s and 30s, eager to become hawkers, often approach me to teach them my recipe. But I turned all of them away because I don't want to cause them harm.

'There is no way they can make money selling glutinous rice if they have to pay a few thousand dollars in monthly rent.'

Mr Chee, who has a habit of rocking his body back and forth as he dishes out the rice to queues of customers, started out as a roadside hawker in Trengganu Street in 1969 when he was 20. Then, he sold his fare for just 15 cents.

The secondary school-leaver learnt to cook the Teochew-style dish - the rice is steamed, then fried in shallot oil and tossed with anchovies, dried prawns and roasted peanuts - from his father, a street hawker with a separate stall in Mosque Street.

He was relocated to the Smith Street Food Centre when the building opened in 1983. After the hawker centre was revamped in 2008, his rent rose from $160 to $320.

He said he will retire when he no longer has the stamina to wake up at 3am, six days a week, to cook. The stall opens at 6.30am and he usually sells out by 11am.

He plans to give up his stall then and collect a modest takeover cum retirement fee instead of passing on the business to his only son, a 32-year-old software engineer who is not interested in becoming a hawker.

As for the loss of a heritage food from the local hawker scene by then, Mr Chee shrugged and said: 'It is inevitable. It will be tough for anyone to sell glutinous rice like I do for so cheap, with rents getting higher.'

Huang Lijie

The mid-career hawker: Lower rent a big draw
Mr Rozel John Bacomo's hip-looking pasta stall, Once Upon A Thyme, would fit right in - in a spiffy coffee shop or foodcourt.

But the 29-year-old former restaurant cook chose to open his stall in a hawker centre because it offered the cheapest rental rate.

The Singapore permanent resident from the Philippines pays $1,280 a month for his stall at Golden Mile Food Centre.

Mr Bacomo said he wanted to be his own boss, after spending six years as a cook at Swissotel The Stamford hotel, Mint Cafe in Seah Street and the PS Cafe chain.

The first-time entrepreneur, however, had limited capital so the low cost of opening a stall in a hawker centre appealed to him. He spent about $15,000 to set up and equip the stall.

He also felt the rent at a hawker centre stall would be more stable than that at a coffee shop.

'I have heard from people in the business that some coffee shop owners raise the rent if their tenants do well,' he said.

His Singaporean wife, Gina Tan, 29, a website designer and co-owner of the hawker business, successfully bid for a stall at the popular Golden Mile Food Centre through an open tender by the National Environment Agency in February.

Since becoming a hawker in April, he has had to handle the pressure of being a boss.

'As a cook in a restaurant or cafe, I just had to cook.

'Now, I have to take care of everything, including calculating my costs and making sure I can cover them,' he said. He has a part-time worker who helps with taking orders and serving food.

He has also been clocking 14-hour days instead of eight hours as a wage-earning cook.

But he derives satisfaction from seeing his business grow. He has an increasing pool of repeat customers, mostly office workers in the area who have no qualms about paying between $4 and $6 for his pasta meals when the average price of a meal at the hawker centre is about $3.

He explained that his pasta dishes, such as the $6 butter fish aglio olio, are priced that way because he uses mostly fresh produce, which drives up the cost of his ingredients.

He said: 'I want to do proper Western food, not the type of Singapore-style Western food where everything is deep fried.'

He also hopes to open his own cafe one day.

'For now, I am trying out my food in a hawker centre to see if it will sell, and to gain experience running a business,' he said.

Huang Lijie

The subletter: Business is good
The stall in the Chinatown People's Park Food Centre is barely twice the size of a toilet cubicle, but Ms Lina Ma, 32, willingly pays $5,000 a month to sublet it.

For 12 hours each day, the China-born hawker sells Japanese and Korean bento boxes, prepared with culinary skills she learnt from a chef in her Henan hometown.

A Singaporean permanent resident since 2008, Ms Ma can rent cheaper stalls from the Government, but she said her stall's location cannot be beaten.

'Even at the higher rent, I can take home about $2,000 a month. I don't know if it would be the same somewhere else,' she said.

She took over the stall last month, but has worked in food outlets as a cook since she arrived in Singapore in 2007.

'My husband works as a chef in a restaurant here. Cooking is all we have ever wanted to do,' she said.

She said starting her own stall took courage, but it was worthwhile. 'If you want to succeed as a hawker, the hours are very long and it is very tiring. But you make the decisions and don't have to answer to someone else,' she said.

At $3.50 to $5, her bento boxes are slightly more expensive than other fare in the centre, but she said customers have been willing to pay for the more unusual cuisine.

She saves on costs by hiring just one helper and working the entire shift.

The location has another unique draw: a tightly-knit Chinese migrant community.

More than half of the stalls in the centre are operated by China- born permanent residents.

When The Sunday Times visited the food centre on Friday, the stallholders were seen chatting with each other during the lull periods. They even gave advice to tourists from the mainland.

Such hawker centres with many migrant stallholders are becoming more common with the influx of foreigners into the Republic.

The Sunday Times found that at least 10 stalls in two Bedok hawker centres are also operated by China-born permanent residents. They also sublet the stalls at $5,000 or more a month.

The stall-holders, like Ms Ma, said they were willing to swallow the higher rents because of the established crowds and community.

'There's so much uncertainty when you bid for stalls from the Government,' said Ms Ma. 'Here, I knew exactly how much it would cost and what I'd get in return.'

Feng Zengkun

The middleman: When stalls change hands
Hawkers in the east know property agent Alwyn Chan as the go-to guy when they are retiring and want another hawker to take over their subsidised stalls for a plump fee.

In the past six years, the 27-year-old has helped to broker some 40 takeovers of hawker centre stalls.

He earns a 10 per cent commission on the takeover fee and the deals that he has brokered ranged from $30,000 to $100,000, depending on the popularity of the food centre and the location of the stall.

Hawkers paying subsidised rents who want to quit can return their stalls to the National Environment Agency (NEA) or assign them to someone else.

The new stallholders do not enjoy the same subsidy; their rents are raised from the subsidised level to the market rate over three years. But they can become tenants of coveted stalls in prime locations that have long been occupied by stallholders paying subsidised rents.

The takeover fee, however, is a private transaction between the hawkers and NEA does not keep track of it.

Takeovers are a lucrative, untapped market - something Mr Chan, a senior group director at real estate agency Dennis Wee Group stumbled on by chance.

A few of his early clients were hawkers selling their Housing Board flats who happened to also want to give up their hawker stalls.

Now, he receives calls from aspiring hawkers looking for a prime location to set up stall.

He started out by visiting about three to four food centres every week, seeking out hawkers keen to relocate and take over a stall in a popular location. He made repeated visits to about 20 hawker centres in the east, where he lives.

He would hand out his name card and marketing brochure and chat with stallholders to suss out their interest. He also kept a lookout for prospective customers who wanted to give up their subsidised stalls.

Over time, his network grew and he would get referrals for takeovers through word of mouth.

In the last two years, however, he has stopped spending as much time on matchmaking hawkers in takeover deals and turned his attention to coffee shops instead.

He said: 'Coffee shop takeovers are more lucrative because the changing of hands for a whole coffee shop is in the millions of dollars.'

Huang Lijie

The investor: Making the most of a stall

For 30 years, hawkers Florence Tan and her husband Tan Wai Kok have been selling wonton noodles at the Bedok Kaki Bukit 511 Market and Food Centre.

But three years ago, they started renting out their stall at night to other hawkers.

'We start at 5 in the morning, so we usually don't work at night anyway,' said Mrs Tan, who clocks about 10 hours at the stall each day with her husband.

The couple, both in their 50s, have charged different tenants $1,000 to $1,200 in monthly rent. They declined to reveal their monthly takings from selling noodles.

The couple inherited the stall from Mr Tan's mother, who paid $139,000 to lease it for 20 years in 1997. This means their monthly rent, averaged over the years, is just $580.

The Tans are among a group of savvy investors who look at their stalls as not just a workplace but also as a piece of property.

Mr Su Yuan, 45, a technical officer in the Housing Board, bought a stall at the Aljunied Market and Food Centre for $60,000 from his friend three years ago.

'It seemed like a good investment because everyone eats at hawker centres,' he said. Mr Su charges tenants about $1,300 a month, which will net him a profit of about $34,000 by the time the stall's lease expires in 2014.

Other investors told The Sunday Times that hawker stalls are a better investment option than residential properties as they are cheaper and have fewer restrictions.

An investor, who wanted to be known only as Mr Ng, snapped up four stalls at Chomp Chomp Food Centre in Serangoon Gardens between 2008 and 2009.

He charges about $3,000 rent a month for each stall, and expects to make a 5 per cent profit.

'It's a stable form of investment,' he said.

Feng Zengkun

Sunday, December 25, 2011

Hawker Rents

Dec 25, 2011

No more $2.50 chicken rice?

Hawker food prices may rise as subsidised rents are set to expire in the coming years

By Huang Lijie , Feng Zengkun

At the Zion Road hawker centre, a plate of chicken rice costs $2.50. But if you go to the coffee shop next door, be prepared to pay $3.20 for it.

At the foodcourt in the Great World City mall across the road, the price goes up even further, to $4.30.

Since the hawker centre came into existence almost 40 years ago, it has always been the lowest common food price denominator - guaranteeing cheap chow for the nation.

But that $2.50 plate of chicken rice may be a fantasy by the end of the decade.

The reason: Some hawker stall rents are set to soar by more than 10 times in the coming years due to expiring subsidies.

Stall owners in 15 food centres told The Sunday Times that when the rent hike comes, they will either raise their prices or quit the business.

The fallout could also affect food prices at their neighbours' stalls and at coffee shops and foodcourts, which sometimes peg the prices of their fare to those of nearby hawker competitors, The Sunday Times found.

In Clementi, Hougang and River Valley, where all three types of food centres can be found close to one another, the same dishes are priced within $1.50 of each other, with the hawker fare the cheapest.

This is why hawker rental fees must be kept low, argued experts.

'It's necessary so food prices do not escalate,' said Professor Lily Kong, vice-president of university and global relations at the National University of Singapore, who has written a book on hawker centres.

The secret to cheap food

Currently, prospective hawkers have to rent stalls from the National Environment Agency (NEA) or sublet them from other hawkers.

The NEA sets minimum rents determined by valuers for its vacant stalls and auctions them off every month.

Bidders have to be Singapore citizens or permanent residents, and the highest bidder gets the stall for three years, after which he gets priority to renew his lease, which comes at a new market rate.

If the minimum bid is not met, the stall is kept for the next auction.

The NEA also rents out stalls on one- to three-year leases on a walk-in basis, but these are typically leftover stalls in unpopular places.

The monthly rent ranges from $85 to $3,600 for market stalls, which sell sundry goods, although most stalls are rented for between $300 and $800.

The rent for cooked food stalls ranges from $300 to $4,900, but a majority are about $1,000 or more. Stalls in more central locations such as Newton and Serangoon easily command upwards of $2,500 in monthly rent.

Hawkers are allowed to sublet these stalls, even to foreigners, which may cause prices to climb higher in popular areas. At the People's Park Food Centre in Chinatown, for example, hawkers can pay more than $5,000 a month to sublet a stall.

But only half of the 15,000 stalls in Singapore have these market-determined rents.
The other half are now heavily subsidised or are owned by the hawkers themselves.

About 40 per cent of hawkers pay only between $56 and $320 for their stalls, possibly less than a tenth of the market rates.

This is mostly because they are first-generation hawkers, lured off the streets in the 1970s for hygiene reasons with the low-rent stalls.

Mr Chua Chuan Liang, 70, for example, has paid just $200 a month in rent for a minced meat noodles stall in the Clementi 448 Market and Food Centre for the past three decades.

The low rents are guaranteed as long as the hawkers personally operate them and do not sublet the stalls. When they die, their immediate family can also take up the subsidised stalls with the same conditions.

Another 15 per cent of the hawkers own their stalls, which they bought in the 1990s during a government project to encourage hawkers to be stall owners.

The costs of their 20-year leases were determined by valuers, and the hawkers were given a 30 per cent discount capped at $28,000.

These hawkers are free to resell their leases or sublet the stalls to anyone.

Mr Goh Chye Lee, 60, for example, paid $124,000 for his sugarcane juice stall at the Serangoon Gardens Chomp Chomp Food Centre in 1997.

This means his monthly rent, averaged over the 20 years, has been stabilised at just $520.

Subsidised and rent-free hawkers told The Sunday Times that this has allowed them to sell their food at lower prices.

Hawker Chee Hua Pheow, 62, for example, charges just $1.20 for a plate of stir-fried glutinous rice, among the cheapest meals sold at Chinatown's Smith Street Food Centre. He pays $320 in monthly rent.
The hawkers have also helped to hold down prices charged by their non-subsidised neighbours, and at coffee shops and foodcourts.

Ms Ng Siew Khin, 70, is Mr Goh's neighbour at the Chomp Chomp Food Centre and also sells sugarcane juice.

She pays six times his rent at $3,300 a month to sublet a same-sized stall, but sells the juice at the same price as Mr Goh - at $1.50 a glass.

'If mine is more expensive, nobody will buy from me,' she said.

Stall rents in coffee shops and foodcourts are determined by private owners who own the properties, or by the Housing Board, which leases stalls at market rents in 300 HDB coffee shops.

Checks by The Sunday Times at 40 coffee shops and foodcourts found that rents can range from $2,500 for a coffee shop stall in the heartland to $15,000 for a foodcourt stall in Orchard Road, also several orders above the subsidised hawkers' rents.

But the food sellers told The Sunday Times that they usually peg their prices to those of nearby hawker competitors, charging up to $1.50 more for the same dishes despite the much higher rental fees.

Mr Siva Kumar, 44, owner of an Indian Muslim food stall in a Ghim Moh coffee shop, sells prata for 80 cents, the same as that sold in the next-door Block 20 Ghim Moh Road hawker centre. This is despite monthly rents of $4,000, more than double that of his hawker competitor.

'If I don't follow the price in the hawker centre, customers will just go next door,' he said.

He covers his rent by offering a wider range of food items, such as Indian rojak, which he prices at 50 cents per piece.

The looming cost

But the era of low rents will soon be over for the subsidised half of the industry.

The first-generation hawkers can transfer their low rents only once to their family members.

After the second generation dies, or if the hawkers hang up their woks, the Government will take back the stalls and raise the rent back to market rates.

Ms Grace Fu, Senior Minister of State for the Environment and Water Resources, told reporters at a meeting about hawker centres earlier this month that the subsidies are unlikely to be extended.

Doing so would create hawker dynasties, making it harder for outsiders to gain a foothold in the industry, she said. 'I don't think a person should enjoy lower rents than her competitors just because her parents were hawkers,' she added.

This means many of the subsidies could expire within the decade.

The 20-year leases sold to hawkers will also expire between 2014 and 2017, after which those stalls will also be rented out at market rates.

At the Kovan Hougang Food Centre at Hougang Street 21, the end of the subsidies could mean a rent increase of more than 20 times.

One subsidised stall's monthly rent at the centre is $190, compared with $3,000 at the Government's non-subsidised rate and more than $5,000 if it is sublet.

Hawkers say food prices will increase with the rental fees.

Subsidised chicken rice seller Lin Leong Wah, 52, currently pays $200 a month to rent a stall in the Kovan food centre. He has dished out countless $2 plates, but said he would have to increase his price to at least $2.50 if his rent was higher.

'Otherwise how to survive?' he asked.

This may open the floodgates for their coffee shop and foodcourt competitors to raise their prices.

Mr Hong Poh Hin, 64, chairman of the Foochow Coffee Restaurant & Bar Merchants Association, which represents 450 coffee shop owners, said: 'If there is an overall increase in hawker food prices, coffee shop and foodcourt stall holders, especially those who have kept their profit margins very low to compete with hawker centres, will likely also adjust their prices to ease their burden.'

More complications

This spectre of rising food prices is among the top concerns of a panel set up to rethink the hawker centre.

In October, the Government announced it will build 10 new hawker centres after a 26-year hiatus.

It said this would provide cheap and good quality food for more Singaporeans; Ms Fu added that more stalls could help to spur competition and lower food prices.

The first centre will go up in Bukit Panjang within three years; the locations of the rest have not been determined but priority will go to the new towns, where there are fewer such centres.

Earlier this month, the Government unveiled a team of experts ranging from architects to food operators to come up with fresh ideas to run the new hawker centres. The panel will complete its consultation by next month.

Ms Fu said its solutions could be applied to the existing 107 hawker centres as well.

Social entrepreneur Elim Chew, who heads the panel, said keeping rental fees affordable will be among its priorities.

But hawker analysts said this may not be enough to keep the centres' food cheap, especially if the cost of living rises.

Ms Fu said there is no guarantee low rents will lead to low food prices. 'Some hawkers may choose to maximise their profits instead,' she said.

[No guarantee that more hawker centres will lead to better quality food or competition in food quality - only in pricing, and rental.]

The Sunday Times also found low-cost hawkers who sublet their stalls at higher rents to earn a passive income.

At the Chomp Chomp Food Centre alone, five of the 20-year leased stalls are legally sublet at market rents of $2,800 to $3,300 a month.

Hawkers who took over the long-lease stalls at the Kaki Bukit 511 Market and Food Centre in Bedok can even hand over more than $5,000 a month to their landlords.

Said one of the Kaki Bukit subletters, who declined to be named: 'The owner of this stall lives off my money in a bungalow.'

Others noted that low rents lead to problems such as limited opening hours.

Mr Patrick Sze, 51, chairman of the hawkers' association at the Clementi 448 Market and Food Centre, said hawkers tend to shutter their stalls once they hit a daily income target. He said: 'Subsidised stalls usually close after lunch because the owners have made enough to cover their low rent.'

And then there is the problem of manpower. NUS' Prof Kong asked if there are even enough passionate hawkers in the Republic to operate the new stalls.

'There is a concern that the quality of hawker food has declined because people with no skills or real interest enter the trade and treat it as a mere job,' she said.

["Passion"? I think many of the original hawkers also treated their jobs as jobs. For some, it was probably the only thing they could get, and they made the best of it. And those without ability (or passion) fell by the wayside, leaving those with ability, affinity, and perhaps passion. 

Today, people tend to have more employment options. "Hawkering" is not attractive. And passion comes few and far between.]

These interlinked problems will become even more stark as more Singaporeans eat out, said the analysts.

A national nutrition survey by the Health Promotion Board last year found that six in 10 Singaporeans eat out at least four times a week, up from five in 10 in 2004.

What is needed, they say, is a radical re-imagining of the Singapore icon.

The social solution?

One idea that has gained traction is that of a social enterprise. This would involve remaking the hawker centre as a non-profit place to provide cheap and good quality food. The idea was mooted by Environment and Water Resources Minister Vivian Balakrishnan in October and Ms Chew said the panel is considering it.

This would be similar to the role NTUC FairPrice plays to keep basic food items affordable, said Ms Fu. When global food prices spiked in February, the local supermarket chain froze prices for its house-brand rice for six months. It extended the freeze on its Thai house-brand rice on Thursday for another two months.

'Ideally, we want a hawker centre operator who can exert influence on opening hours, tenant mix and food prices,' added Ms Fu.

[Good luck. "Hawkering" is not easy. The Singaporeans have a dream. It does not include slaving over a hot stove for little profit. ]

Ms Chew declined to provide more details on this as the panel is still gathering feedback.

Others said the Government could continue to offer subsidies, but with more restrictions.

These include banning sublets and private stall transfer arrangements between hawkers, which the Government currently does not track.

Hawkers have demanded fees of up to $300,000 just to transfer their rentals of stalls in highly sought-after places.

Food guru K.F. Seetoh and MP for Moulmein-Kallang GRC Denise Phua have raised concerns that these practices could drive up food prices as the new stall holders try to defray the cost of such fees.

The Government alone should handle the assignment of stalls to prevent this, they said.

Mr Tan Chin Keong, an equity analyst at UBS Wealth Management Research with an interest in property, suggested an official day-and-night dual leasing model.

'Taxi drivers share their cars in shifts. This would help to lower rental and operating costs for hawkers,' he said, although he noted this would work only in areas that attract a steady crowd at all hours.

As for ways to suss out passionate hawkers and to hone their culinary skills, Ms Chew said stalls could be provided to young entrepreneurs.

[Offer "Heritage" hawkers, with proven track records, low rentals in prestigious sites. There are implementation details to be worked out - who decides what is heritage, what if the hawker wants to take it easy, etc.]

'Young people can explore possibilities for food start-ups and then move on to restaurants if they prefer that,' she said, noting that hawker centres have a lower start-up cost compared with more upscale establishments.

She added that the new hawker centres could double as a social safety net by offering jobs to the disabled.

Mr Nicholas Aw, president of the Disabled People's Association, said employing people with disabilities or setting aside stalls for them would create awareness of the issues they face and inspire the community.

But he added that the panel has not consulted his group.

'I hope the panel at least talks to a person with disabilities to understand what needs to be done for the idea to work,' he said.

Mr Seetoh said more should also be done to bridge the gap between the old guard and new entrants of the trade, and suggested setting up a cooking school to maintain a minimum hawker standard in the Republic.

Hawker centres in 2030

But whatever form the hawker centre of the future takes, it must not lose its role as a social glue, said Ms Chew.

She suggested that hawker centres be used for community activities in the future.

The panel is also considering installing wireless Internet at the centres for the connected generation.

And in a country where one in five Singaporeans will be 65 or older by 2030, hawker centres could even ease aching joints by delivering food to the elderly who live nearby, she said.

'Hawker centres have been in the lives of Singaporeans for decades.

'Now it's time to see how we can make it sustainable for generations to come,' she said.

[Edited 14 Jul 2014]

Thursday, December 22, 2011

Kicking up a fuss ensures MRT standards kept high

Dec 20, 2011
By Joel Cooper

ANGER, frustration, dismay. All of these emotions were etched onto the faces of passengers left in the lurch by the past week's MRT breakdowns.

But as I looked at the pictures of stranded commuters, my main feeling was one of deja vu.

I come from London, a city that sits on top of the world's oldest underground rail network. In my hometown, getting stuck on a train that grinds to a halt for no apparent reason is an all-too-frequent experience. Just last year, passengers reportedly had to be led to safety down dark tunnels two days in a row due to power failures and a defective train.

Sound familiar? You bet. Yet there is one big difference between these incidents and Singapore's spate of MRT breakdowns - the reaction. In Britain's case, there were a handful of newspaper articles, but little public outcry. Here, we have had calls for SMRT's chief executive to resign and the Prime Minister announcing an inquiry.

This difference in attitudes has led some of my Singaporean colleagues to ask me whether I think that the public has overreacted to the current travel woes.

My answer is no.

Why shouldn't people demand that standards be kept high? Breakdowns like these might still be rare, but unless commuters keep up the pressure and refuse to accept poor service, they could easily become more common.

The last thing that anyone wants is a situation like in London, where delays happen so often that travellers simply shrug their shoulders as if to say 'just another hold-up'.

Not that the Tube is so terrible. Unlike the MRT, it has no shortage of alternative routes built into its vast underground network. So commuters struggling with one delayed line can often simply hop onto another without having to leave the station.

It's also a lot easier to forgive the occasional hiccup when you remember the Tube is nearly 150 years old in places and has a 408km labyrinth of track - all of which must be painstakingly maintained.

Compared with the clapped out, ageing London Underground, the MRT is like a brand new toy fresh out of its box. If it does not work perfectly, who can blame the customer for asking for his money back?

With only 146.5km of track, the network is also still quite small, which ought to make it easier to maintain. In general, SMRT and SBS Transit have clearly done a good job of this. Singapore is known throughout the world for its smooth and efficient transport network - which is why the scenes of stranded passengers are such a shock.

But as the network grows older, fatter and more unwieldy, I hope that standards do not start to slip.

After all, a lot is at stake. The Tube may be unreliable at times, but who goes to London for the trains anyway? For most people, it's more about having themselves photographed outside Buckingham Palace or Big Ben.

Singapore is in a very different situation. Being orderly and well run is one of its biggest selling points abroad. Whether you are a holidaymaker hoping for a hassle-free break, or a business traveller wanting to get to meetings on time, the Republic's efficiency is a major draw.

It would be a real shame to see this hard-won reputation eroded. One thing I enjoy about living in Singapore is not having to leave for work early in case of delays. In London, I always allowed at least an extra 15 minutes of journey time for things like cancellations, power failures or the classic British excuse for late trains: 'leaves on the line'.

Here, I can plan my journeys with almost pin-point precision because I know I won't have to wait longer than about five minutes on an MRT platform and, once I'm aboard, nothing will break down.

Of course, last week's setbacks have made me and many other commuters question whether we can still take these things for granted. There will always be the occasional technical glitch, which most of us can tolerate. But if it starts to happen too often, passengers' confidence and goodwill could end up being drained.

Unsurprisingly, research has shown longer train journeys are more stressful for travellers than short ones. This could even have implications for the economy. Commuters nearing the end of lengthy trips perform worse in simple tasks such as proof reading, according to a 2006 study by academics from New York's Cornell and Polytechnic universities.

So, no. Singaporeans are not overreacting to the troubling spate of delays. If you want the best service, you sometimes have to make a fuss. The fact the public has developed such high standards for the MRT shows just how fast and well run it still is. Long may that continue.

Saturday, December 17, 2011

Italian doctor may have found surprisingly simple cure for Multiple Sclerosis


By Loz Blain

November 26, 2009

An Italian doctor has been getting dramatic results with a new type of treatment for Multiple Sclerosis, or MS, which affects up to 2.5 million people worldwide. In an initial study, Dr. Paolo Zamboni took 65 patients with relapsing-remitting MS, performed a simple operation to unblock restricted bloodflow out of the brain - and two years after the surgery, 73% of the patients had no symptoms. Dr. Zamboni's thinking could turn the current understanding of MS on its head, and offer many sufferers a complete cure.

Multiple sclerosis, or MS, has long been regarded as a life sentence of debilitating nerve degeneration. More common in females, the disease affects an estimated 2.5 million people around the world, causing physical and mental disabilities that can gradually destroy a patient's quality of life.

It's generally accepted that there's no cure for MS, only treatments that mitigate the symptoms - but a new way of looking at the disease has opened the door to a simple treatment that is causing radical improvements in a small sample of sufferers.

Italian Dr. Paolo Zamboni has put forward the idea that many types of MS are actually caused by a blockage of the pathways that remove excess iron from the brain - and by simply clearing out a couple of major veins to reopen the blood flow, the root cause of the disease can be eliminated.

Dr. Zamboni's revelations came as part of a very personal mission - to cure his wife as she began a downward spiral after diagnosis. Reading everything he could on the subject, Dr. Zamboni found a number of century-old sources citing excess iron as a possible cause of MS. It happened to dovetail with some research he had been doing previously on how a buildup of iron can damage blood vessels in the legs - could it be that a buildup of iron was somehow damaging blood vessels in the brain?

He immediately took to the ultrasound machine to see if the idea had any merit - and made a staggering discovery. More than 90% of people with MS have some sort of malformation or blockage in the veins that drain blood from the brain. Including, as it turned out, his wife.

He formed a hypothesis on how this could lead to MS: iron builds up in the brain, blocking and damaging these crucial blood vessels. As the vessels rupture, they allow both the iron itself, and immune cells from the bloodstream, to cross the blood-brain barrier into the cerebro-spinal fluid. Once the immune cells have direct access to the immune system, they begin to attack the myelin sheathing of the cerebral nerves - Multiple Sclerosis develops.

He named the problem Chronic Cerebro-Spinal Venous Insufficiency, or CCSVI.

Zamboni immediately scheduled his wife for a simple operation to unblock the veins - a catheter was threaded up through blood vessels in the groin area, all the way up to the effected area, and then a small balloon was inflated to clear out the blockage. It's a standard and relatively risk-free operation - and the results were immediate. In the three years since the surgery, Dr. Zamboni's wife has not had an attack.

Widening out his study, Dr. Zamboni then tried the same operation on a group of 65 MS-sufferers, identifying blood drainage blockages in the brain and unblocking them - and more than 73% of the patients are completely free of the symptoms of MS, two years after the operation.

In some cases, a balloon is not enough to fully open the vein channel, which collapses either as soon as the balloon is removed, or sometime later. In these cases, a metal stent can easily be used, which remains in place holding the vein open permanently.

Dr. Zamboni's lucky find is yet to be accepted by the medical community, which is traditionally slow to accept revolutionary ideas. Still, most agree that while further study needs to be undertaken before this is looked upon as a cure for MS, the results thus far have been very positive.

Naturally, support groups for MS sufferers are buzzing with the news that a simple operation could free patients from what they have always been told would be a lifelong affliction, and further studies are being undertaken by researchers around the world hoping to confirm the link between CCSVI and MS, and open the door for the treatment to become available for sufferers worldwide.

It's certainly a very exciting find for MS sufferers, as it represents a possible complete cure, as opposed to an ongoing treatment of symptoms. We wish Dr. Zamboni and the various teams looking further into this issue the best of luck.

Via The Globe and Mail.

Wednesday, December 14, 2011

Beware the inequality trap

Dec 14, 2011

Singapore should consider more inclusive approach to social spending
By Donald Low & Yeoh Lam Keong

INCOME inequality in Singapore has risen significantly in the last decade. Whether measured by the Gini coefficient or by the ratio of incomes between the top and bottom 20 per cent, the evidence points to a more unequal society. Government redistribution in the form of taxes and transfers has not slowed the increase in inequality sufficiently. According to the Ministry of Manpower's data on employed citizens, Singapore society after government redistribution is more unequal today than it was 10 years ago before government redistribution, as measured by the Gini coefficient.

Not only is income inequality rising, there are also certain aspects of Singapore's inequality patterns that make it especially worrying. To begin with, the increase in income inequality is accompanied by wage stagnation for some segments of the workforce. Between 2001 and this year, the median incomes for full-time employed citizens increased by just 11 per cent in real terms, while the 20th percentile saw no increase at all. Including part-time workers would likely show wage stagnation extending to a much larger proportion of the workforce.

Second, there are concerns that social mobility in Singapore has declined. Inequality is more tolerable if social mobility is high. Policymakers have tended to place greater emphasis on social mobility when discussing rising inequality, arguing that the former ameliorates the effects of the latter. But cross-country evidence suggests that more equal societies are also more mobile. Even if policymakers care mainly about equality of opportunity, they cannot ignore distributional concerns altogether.

Third, as a growing wealth of research indicates, people's well-being is affected as much by inequality - or relative incomes - as absolute incomes. Even if absolute incomes are rising across the board, rising inequality alone reduces subjective well-being.

Fourth, a more unequal distribution also makes it more difficult to have coherent policies that all segments of society can rally behind. Income stratification, especially if it is combined with low social mobility, may polarise societies as different income groups begin to see their interests as conflicting.

Singapore's social policies - founded on the ideas of individual responsibility, economic growth and jobs for all, and a social security system that emphasises savings and home ownership - have served Singaporeans well. They have enabled Singapore to achieve 'growth with equity' and delivered high standards in education, housing, health care and social infrastructure without imposing a huge burden on public spending.

But in the face of significant changes in Singapore's operating context - globalisation, rapid technological change, a maturing economy, an ageing population, greater economic volatility, and a more uneven distribution of the fruits of growth - Singapore's social compact needs to be re-examined and reformulated.

Targeted v inclusive approaches

IN MUCH of the policy discourse on inequality, the emphasis in Singapore has been on what (more) the Government should do for the poor. The implicit assumption here is that the state's role should be confined to poverty reduction, and that inequality by itself does not merit policy action.

This is consistent with the Anglo-Saxon or 'residual' model of social welfare. In this approach, social transfers are means-tested rather than universal. This model also envisages a smaller, less redistributive state since the aim is not to achieve more equal outcomes but to ensure no one falls below a certain absolute level. It is therefore ambivalent about the need for more government redistribution in the face of rising inequality.

Policymakers in Singapore generally subscribe to this more targeted approach of social welfare. They believe that government assistance should be limited, that it should help only those least able to afford basic services. The case for this residual model of social welfare is augmented further by the emphasis on the family as the first line of defence after the individual has exhausted his means, and by concerns over the fiscal sustainability of inter-generational transfers.

A second approach, favoured by the northern European countries, espouses the principle of inclusion and relies more on universal programmes that benefit the large majority of their populations.

These systems emphasise the government's role in redistributing incomes, and in fostering solidarity and social trust. Social scientists mostly accept that trust is correlated with a number of normatively desirable things. For instance, people who believe that most other people in their society can be trusted are more inclined to have a positive view of their public institutions, to participate more in civic organisations, to give more to charity, and to be more tolerant towards minorities and people not like themselves.

More inclusive universal social programmes raise social trust in at least three ways. First, because such programmes are more redistributive than means-tested ones, they result in lower levels of economic inequality after government taxes and transfers are taken into account. Second, since inclusive programmes are based on the principle of equal treatment, they increase the sense of 'equal opportunities' more so than means-tested programmes. Third, means-tested programmes often accentuate class divisions within a society, and lead to less trust. By contrast, inclusive programmes enhance solidarity and the perception of a shared fate among citizens.

Despite their appeal, inclusive and more universal social programmes that promote trust may be hard to establish in societies with already high inequality.

This is partly because these programmes often extend benefits to better-off groups which can be difficult to justify. Such societies may find themselves stuck in an inequality trap characterised by low levels of trust, an aversion to more inclusive and universal social programmes, and increased reliance on targeting to differentiate between those entitled to benefits and those who are not.

To be sure, inclusive universal social programmes have their costs too.

Broad-based benefits in child care, health care, elder care, pensions and unemployment protection cost more than means-tested ones. In northern European countries, generous benefits have to be financed by a wide range of higher taxes.

But policymakers should weigh the costs of inclusive universal programmes against their benefits in terms of fostering norms of fairness, and in promoting social trust, citizenship and solidarity. Whether the costs of such programmes exceed their benefits is an empirical, rather than theoretical, question.

Relevance for Singapore

IT WOULD be easy for Singaporean policymakers to dismiss the inclusive approach to social spending as too costly, too corrosive of Singapore's work ethic and too undermining of competitiveness. In Singapore's multi-ethnic context, given its heavy reliance on foreign investments, policymakers may argue that Singapore cannot afford the aggressively redistributive model of northern Europe.

Notwithstanding differences in contexts, there are still important lessons that the more universal approach offers Singapore. The first is that when designing social programmes, the traditional objectives of efficiency and getting incentives right should be complemented with an understanding of the norms that inclusive social programmes may help to foster.

In theory, means-tested programmes limit moral hazard and 'deadweight funding'. In practice however, they often result in high administrative costs, divisiveness and rent-seeking behaviours. For instance, the British government's efforts in the early 2000s to means-test state pensions resulted in people saving less so as to qualify for higher entitlements.

Pursuing a more inclusive approach to social spending in areas such as early childhood development, unemployment protection, health care and long-term care could strengthen norms of fairness, promote social trust and foster an egalitarian ethos. Within this approach, benefits can be structured progressively.

In elder care for instance, instead of only targeted subsidies, a basic tier of benefits could be considered for all older citizens who require long-term care, combined with means-tested ones for those with lesser means.

Second, policymakers should analyse social policies in terms of cost effectiveness, not just cost containment. A cost containment mindset focuses on keeping social spending as low as possible in the fear that transfers, once provided, fuel an insatiable demand for more. However, the key question is not how Singapore can keep social spending on a tight leash, but what kinds of social spending deliver the largest benefits and how an appropriate balance of universal and targeted policies can be designed. Applying this approach may well result in social policy choices quite different from the ones today.

Singapore's own history also suggests that large-scale, inclusive social programmes have generated the largest benefits. Its public housing programme, the heavily subsidised basic education system, and the large investments in public health, water and sanitation were largely universal. They fostered a sense of citizenship and helped to create the social conditions that supported economic growth.

Singapore needs the same boldness of using public monies to achieve desirable social ends to be applied to the policy challenges of today - an ageing population, wage stagnation, rising inequality and increasing health and long-term care needs. A narrowly targeted approach to these challenges may enable the government to maintain healthy surpluses, but would also result in missed opportunities to improve the welfare of citizens and bolster social trust. To avoid the inequality trap, Singapore needs not just expanded social safety nets, but also more inclusive ones.

The writers, both of whom used to work for government agencies, are vice-presidents of the Economic Society of Singapore.

Saturday, December 10, 2011

Property curbs nothing to do with speculation

Dec 9, 2011
The problem now is rising asset prices as global capital pours in
By Robin Chan

THE Real Estate Developers' Association of Singapore (Redas) had a sharp riposte for the Government on Wednesday night, after an unprecedented set of cooling measures was unveiled for the property market.

It said there had been 'no return to a speculative market' in Singapore - implying that the Government misread the problem of continually rising prices and consequently applied the wrong sort of medicine.

With all due respect to Redas, I suspect that the association may have been the one to have misread the problem.

That is because any casual observer - and so, certainly policymakers in the Government - can quite easily tell that there is very little speculation now in the property market.

Subsales, a classic indicator of speculative buying, now constitute just 6.6 per cent of transactions - their lowest level in five years.

The Government also killed off most, if not all, speculative activity by imposing a hefty seller's stamp duty of up to 16 per cent on any property that is resold within four years.

So the measures announced on Wednesday could not have been about warding off speculation. That issue has mostly come and gone.

The measures also did not seem to be about protecting buyers against default. That objective was largely met by progressively lowering the loan-to-value ratio to 60 per cent for property investors with an existing home loan, to ensure that they are adequately cushioned against a sudden fall in prices.

So if they were not primarily about preventing speculation or protecting buyers, what were the latest curbs really meant to do?

To me, the answer does not lie with Minister for National Development Khaw Boon Wan or his colleagues, but with economic agencies like the Monetary Authority of Singapore (MAS).

For a while now, Singapore's financial stability watchdogs have been warning about the dangers of rising asset prices as increasingly large waves of global capital flood into the country in the current era of low interest rates.

In MAS' recently published 40th anniversary book, its managing director Ravi Menon is quoted as saying that monetary policy has traditionally focused on stability in consumer prices, but 'dislocations in asset prices' like property prices can be much more disruptive to economic growth. He made the same point in a speech last week.

To see this, we need only look back a couple of years to the last global financial crisis, which was triggered by a property bubble that burst in the US and parts of Europe. In Singapore, buyers and developers took almost a decade to recover from the 1996 property crash.

The problem, Mr Menon says, is that 'we don't have a means for even measuring asset price inflation, let alone a coherent set of tools to deal with it'.

'Developing a toolkit to address asset price inflation is going to be a key challenge for the next 10 years,' he concludes.

'What does it mean for adjusting our existing policy framework - I don't know. I do know that we just cannot sit still and continue to apply the old paradigms. And we may need solutions that perhaps go beyond the MAS.'

Indeed, in announcing the property curbs, Deputy Prime Minister and MAS chairman Tharman Shanmugaratnam put large investment flows into the property market at the heart of the rationale for policy change.

He said action was needed now to 'avoid the prospect of a major, destabilising correction further down the road'.

Seen in this light, the property curbs announced on Wednesday night are really a prudential measure to safeguard the economic stability of Singapore.

The risks are very real. With anaemic economic growth forecast for all the world's major developed economies - the US, Europe and Japan - central banks look set to continue pumping cheap money into markets. There is already talk of a third round of quantitative easing and more interest rate cuts in Europe.

Much of that money will flow into Asia, which has more attractive growth prospects. And this will send more money into hard assets like Singapore property.

The island Republic is already seen as a safe haven for foreign investors and its property market is open and highly attractive. Bank of America-Merrill Lynch economist Chua Hak Bin said that for Singapore, these episodes of foreign capital inflows (and outflows) can be 'enormous and unsettling'.

A second factor influencing these latest measures is political. As Citigroup economist Kit Wei Zheng put it, part of the social contract in Singapore is to turn each average worker into a property owner and allow him to benefit from asset price inflation.

Therefore, property prices ought not to rise faster than people's ability to pay those prices, that is, they should roughly be in tandem with wage increases.

But the link between property prices and wage increase breaks down if a substantial proportion of purchases is from foreigners whose ability to pay has nothing to do with Singapore's economy.

Will the measures work as intended? Commentators say there are two major risks.

One drawback is that they could signal to foreign investors that Singapore is becoming less open, even if people like Mr Tharman speak to the contrary, especially as it comes on the back of tighter immigration laws.

Another is that these measures could further drag down growth in the Singapore economy, which is already expected to grow a weak 1 to 3 per cent next year.

If home prices collapse, consumer spending will be hit. Business services will likely slow as property transactions freeze up, conveyancing activities wind down and mortgage loans soften further, affecting banks, law firms, property developers and agents.

It all just goes to show how tricky it has become to manage all the interconnected parts of an open and global economy.

'I think the world is in an experimental phase on how to deal with asset price inflation. And in Singapore we have been doing our own experiments,' says Mr Menon in the MAS book.

So as the toolkit is being refined and expanded, expect plenty of heart-stopping moments like Wednesday night's along the way.

See Prime, Forum

Friday, December 9, 2011

No easy way to fix cab conundrum

Dec 7, 2011

System of surcharges is confusing and remains a second-best alternative
By Christopher Tan

MAKE no mistake, ComfortDelGro's 'taxi fare structure revision' is, to the man in the street, nothing but a fare hike. And a pretty fat one, at that.

The actual list of changes is long: a higher flagdown and metered rate, lengthened surcharge periods, and so on. But the bottom line is, taxi rides will cost appreciably more come Dec 12. A 10km journey to the office in the morning will easily cost 33 per cent more than today.

The most significant change is the extension of the peak period by one hour in the morning and the addition of four new peak hours at night from 8pm to midnight, every day of the year including Sundays and public holidays.

What this means is that only 81/2 out of 24 hours on any day will be effectively 'non-peak' and free of time-based surcharges.

The question is: Why have we reached this state of affairs? After all, Singapore has more taxis per person than most - if not all - big developed cities.

As at 2008, there were close to 5,200 cabs here for every one million people, versus 2,640 in Hong Kong, 3,280 in London and 1,520 in New York.

Yet, complaints from commuters who can't find a cab when they need one have never ceased, whatever we seem to throw at the problem.

The latest attempt is a two-pronged strategy that aims to do two things at the same time - reduce demand and increase supply.

On the demand side of the equation, the fare hike is meant to price out some commuters during the peak period crunch, making it easier for the rest to get a cab.

But whether this will actually happen, of course, remains a function of the size of the fare increase. And past experience has shown Singapore commuters to be fairly resilient in this regard.

The increase has to be substantial enough to have an effect on demand, or it will be a meaningless exercise.

On the supply side, the hope is that more cabbies will find it worthwhile to drive at night.

But here, simple economics does not always translate to the desired change in driving patterns.

Most cabbies, one National University of Singapore study supervised by transport economist Anthony Chin found, have a target take-home income. Once they have achieved it, they either call it a day, or take it easy. Enhancing surcharges will only help these cabbies reach their target earnings faster.

So it remains to be seen what effect the new surcharges will actually have on the ground.

In the meantime, however, the country will be left to deal - more than ever - with the distortionary economic effects of surcharges.

Whoever devised surcharges meant well. In theory, surcharges help to target specific areas or periods of time when supply does not meet demand adequately.

In the case of the Singapore taxi industry, however, the reality is that surcharges have only given rise to yield-maximising behaviour on the part of cabbies.

Better known distortions that customers know all too well include:
  • cabs disappearing before midnight,
  • taxi queues growing longer as empty cabs cruise in nearby lanes waiting for phone bookings, and
  • a supply void that materialises at the same time at dawn and dusk as every driver changes shift at the same time (to allow the next driver a fair shake of the next peak surcharge period).
And we have not even factored in the messy confusion that tourists are faced with every time they pay for a cab ride.

Is it time, therefore to 'reset' the system here?

One way is to dismantle all the clunky surcharges and simply raise the flagdown and metered fares. Let market forces dictate how supply matches demand.

Indeed, there are examples of simple fare structures working well elsewhere.

Hong Kong, where the cab service is rated favourably (at least by Singaporean visitors), has none of the surcharges applied here. Call-booking charge is a flat HK$5, or around 85 Singapore cents. While there are surcharges for luggage and pets in Hong Kong, they are nominal.

Of course, implementing a simple fare structure alone won't solve the problem of an excess demand for cabs. It is a question of price.

Trebling or quadrupling fares to make cabs a luxury (like in places such as Tokyo or New York) could therefore be an effective solution.

But it is a brutal one, and the social and political costs may be too high.

Such a move would easily price out half of the one million or so daily cab trips - something we may not want to do today, with trains and buses so packed and car prices so steep.

Such a system will also see far fewer cabs in operation, and consequently, working cabbies.

So all things considered, ComfortDelGro's fare revision seems a more palatable solution, even if inelegant.

Whatever you may say, it should work to keep cabs plying for longer by rewarding main drivers who can muster longer hours each day.

It will also make it worthwhile for more relief drivers to come into the market. There are more than 93,000 people with vocational licences to drive taxis here - roughly 31/2 for every cab.

But it remains very much a second- best alternative.

Come next Monday, commuters will realise that the only hour of the day that a cab ride will be cheaper than today will be between 5pm and 6pm.

And that might create yet another curious effect in the local market: a mad Happy Hour rush akin to pub goers quaffing down as many beers as possible.

Sunday, December 4, 2011

Reports of America's death much exaggerated

Dec 4, 2011
By Michael Dee

As an avid reader of The Straits Times Review pages, I have witnessed a decided concern and hand-wringing about the future of the United States which often reads like an obituary.

As Mark Twain said upon reading that he was dead: 'Rumours of my death are greatly exaggerated.'

While I too am concerned about America's current path, my response has been to read more American history in order to refresh the context of the broad sweep of the American experience.

An America in decline is not the America I know and thus I feel compelled to offer three points to put the current situation into a broader context.

First, the current political and economic situation is not unusual in the history of American politics and is likely not even in the top 10 of American crisis periods. Historically, over the last 235 years, America has dealt with much bigger problems such as invasions, civil wars, natural disasters, depressions, World Wars and overall nation building.

Aside from debilitating crises, America has always had to deal with conflicting internal visions as to the nature of American society and its governance. This nature regularly changes in ebbs and flows over time with transitions not too dissimilar to today's. However, despite such challenges, the American resilience and optimism, along with the ability to dynamically reinvent itself while adapting to new conditions, is the greatest strength of the country.

It is compromise that America lacks at this moment but, again, we've been there many times before. The short-term vision of just a few years or even decades is not enough to fully appreciate what has come to be known as American Exceptionalism. While some will debate the point, I believe America is exceptional for the very reason that its citizens do have conflicting visions and they are allowed the candour and forum for the expression of those ideas, which are vetted and then voted upon.

In the short term, it looks messy from the outside, but only because all points of view can be heard and the process is highly transparent and often very loud. But think about it, when was the last time you heard a debate among Chinese Politburo members? In the grand sweep of history, 'Of the people, by the people and for the people' are sweet words indeed, words worth fighting and dying for.

Second, competing visions are healthy and are part of the reason America is the global leader it is. Competition is what drove our species from cave drawings to space travel in the blink of an evolutionary eye. At times we compete and at times we cooperate; this is our nature. One without the other is less efficient.

The America the world sees now is facing two conflicting visions of the world and its future. The fierce independent streak of the American psyche must reconcile itself with the compassionate nature of its people. The wealth and influence allowed to the most successful of its citizens must reconcile with the broader needs of social justice and upward mobility. An America which has only recently built its own nation must now seek to find its place in a newly dynamic world.

To some, America's government is a force for good yet, for others, less is more. Each has a point. The federal government is controlled by the 545 Americans of the Congress, the President and the Supreme Court, who will naturally struggle to reconcile the desires and visions of a free people 55 thousand times larger amid the cacophony of special interests.

Third, the American people are ultimately in control of their fate and should be trusted to resolve its issues in due time with peaceful elections, but not without fierce debate. America was established to balance power. The American people are not wussies. Americans will fight for what they believe in. Americans do not build statues to committees. Americans look for leadership and have proven time and again that they will change direction as needed under inspired leadership.

Americans and their government will make mistakes but will then correct those mistakes, sometimes faster, sometimes slower, with each successive American election in many ways a reflection of the one that preceded it.

Foreign pundits who speak about America are most often not speaking to Americans, but rather to their own domestic citizens for their own agendas. While that is as it should be, we welcome the critique and appreciate the global importance attached to the moral, economic and political stability that the US brings to the world stage.

We strive to do our best, yet let's not forget that the American taxpayer foots a large portion of the military expense, development aid and humanitarian relief globally to create a peaceful and just world. Until foreign governments step up and agree to share the fiscal cost and burden, their voice will be held in context.

The American people are in control of America's future and, as a nation, we will do what we as a people believe is the right thing to do. We seek to form a consensus or at least a majority to reconcile our differences.

In the meantime, enjoy the musical beauty of the arguments for it is the sound of freedom, and there is no better sound in the world.

The writer, a Singapore permanent resident, is a former regional CEO for Morgan Stanley and former senior managing director of Temasek Holdings.

[To be sure, SG would like to the US to recover and continue to provide stability in the region and in fact, the world. But the antics of the US govt, is unlikely to inspire confidence.

The cacophony of voices and views is not unusual, Dee claims. So we are supposed to be assured that eventually the voice of reason will be heard above the cacophony and commonsense will prevail. How do we know that the cacophony is the process by which the voice of reason emerges, or that in all those other times, reason emerges in spite of the cacophony, not because of it?

America has faced many challenges in the past and prevailed in spite of their entrenched process of thesis-antithesis. But this time sheer momentum will make China the largest economy in about 15 years (give or take) regardless of what the US does. In other words, in the past, America was its own worst enemy. Now the challenge is from the outside. The centre is shifting, regardless of America's doing. And the sad part is, instead of facing up to the challenge, America is business as usual, and deluding itself with concepts like "American Exceptionalism".

The reality may simply be that in the new world order, the muddling ahead, the back-and-forthing, the Washington two-step may not be responsible enough.

The fact is political expediency has trumped vision and inspiration. Yes, America has been blessed with inspired leaders in the past, but in the present, the media and the internet has effectively crippled if not emasculated the political leadership. No US leader can say anything, without the media dissecting and disparaging any and every word spoken.

Before any leader can inspire, he is already disparaged. Yes, America needs an inspiring leader. Unfortunately, the system has precluded the prospect of any such leader.

e pluribus unem? More like e pluribus nihilum.

So yes. America needs to do better. But to do better, it needs to make the tough choices. But the tough choices are not politically palatable.  And the politicians don't have the guts to make those choices and sell those choices to the people, the voters.  Or before they can sell those choices, their opponents are already tearing apart their idea for political gain.

Or the politicians have already sold their votes to big corporations for short term capitalistic gain.

Where is the infrastructural  investment necessary for America's economic growth? Where is the investment in education and training to prepare young Americans for jobs of today and the future?

Maybe Dee is right and America will get around to it.  But they don't seem to be ready to do so. Oh they are ready to talk about it. And yell at each other about it. And maybe even vote on it. But that's a long way from doing anything about it.]

Wednesday, November 30, 2011

Martin Feldstein: Europe is Not the United States

Nov 30, 2011
CAMBRIDGE - Europe is now struggling with the inevitable adverse consequences of imposing a single currency on a very heterogeneous collection of countries. But the budget crisis in Greece and the risk of insolvency in Italy and Spain are just part of the problem caused by the single currency. The fragility of the major European banks, high unemployment rates, and the large intra-European trade imbalance (Germany's US$200 billion current-account surplus versus the combined US$300 billion current-account deficit in the rest of the eurozone) also reflect the use of the euro.

European politicians who insisted on introducing the euro in 1999 ignored the warnings of economists who predicted that a single currency for all of Europe would create serious problems. The euro's advocates were focused on the goal of European political integration, and saw the single currency as part of the process of creating a sense of political community in Europe. They rallied popular support with the slogan 'One Market, One Money,' arguing that the free-trade area created by the European Union would succeed only with a single currency.

Neither history nor economic logic supported that view. Indeed, EU trade functions well, despite the fact that only 17 of the Union's 27 members use the euro.

But the key argument made by European officials and other defenders of the euro has been that, because a single currency works well in the United States, it should also work well in Europe. After all, both are large, continental, and diverse economies. But that argument overlooks three important differences between the US and Europe.

First, the US is effectively a single labour market, with workers moving from areas of high and rising unemployment to places where jobs are more plentiful. In Europe, national labour markets are effectively separated by barriers of language, culture, religion, union membership, and social-insurance systems.

To be sure, some workers in Europe do migrate. In the absence of the high degree of mobility seen in the US, however, overall unemployment can be lowered only if high-unemployment countries can ease monetary policy, an option precluded by the single currency.

A second important difference is that the US has a centralised fiscal system. Individuals and businesses pay the majority of their taxes to the federal government in Washington, rather than to their state (or local) authorities.

When a US state's economic activity slows relative to the rest of the country, the taxes that its individuals and businesses pay to the federal government decline, and the funds that it receives from the federal government (for unemployment benefits and other transfer programs) increase. Roughly speaking, each dollar of GDP decline in a state like Massachusetts or Ohio triggers changes in taxes and transfers that offset about 40 cents of that drop, providing a substantial fiscal stimulus.

There is no comparable offset in Europe, where taxes are almost exclusively paid to, and transfers received from, national governments. The EU's Maastricht Treaty specifically reserves this tax-and-transfer authority to the member states, a reflection of Europeans' unwillingness to transfer funds to other countries' people in the way that Americans are willing to do among people in different states.

The third important difference is that all US states are required by their constitutions to balance their annual operating budgets. While 'rainy day' funds that accumulate in boom years are used to deal with temporary revenue shortfalls, the states' 'general obligation' borrowing is limited to capital projects like roads and schools. Even a state like California, seen by many as a poster child for fiscal profligacy, now has an annual budget deficit of just 1 per cent of its GDP and a general obligation debt of just 4 per cent of GDP.

These limits on state-level budget deficits are a logical implication of the fact that US states cannot create money to fill fiscal gaps. These constitutional rules prevent the kind of deficit and debt problems that have beset the eurozone, where capital markets ignored individual countries' lack of monetary independence.

None of these features of the US economy would develop in Europe even if the eurozone evolved into a more explicitly political union. Although the form of political union advocated by Germany and others remains vague, it would not involve centralised revenue collection, as in the US, because that would place a greater burden on German taxpayers to finance government programs in other countries. Nor would political union enhance labor mobility within the eurozone, overcome the problems caused by imposing a common monetary policy on countries with different cyclical conditions, or improve the trade performance of countries that cannot devalue their exchange rates to regain competitiveness.

The most likely effect of strengthening political union in the eurozone would be to give Germany the power to control the other members' budgets and prescribe changes in their taxes and spending. This formal transfer of sovereignty would only increase the tensions and conflicts that already exist between Germany and other EU countries.

Martin Feldstein, Professor of Economics at Harvard, was Chairman of President Ronald Reagan's Council of Economic Advisers and is former President of the National Bureau for Economic Research.

Tuesday, November 29, 2011

Traditional Chinese medicine face uphill battle in Western countries

Nov 29, 2011

(CHINA DAILY/ASIA NEWS NETWORK) - Ms Jiang Yuechun turned to traditional Chinese medicine (TCM) after Western treatments failed to remove dozens of flat warts coating the backs of her hands.

The 31-year-old university teacher in Beijing says the warts shriveled away without scarring after she ate a porridge of coix seeds - a tropical grain.

She is among many Chinese seeking TCM treatments in place of modern Western remedies at a time when her homeland is promoting the internationalisation of its traditional medicine - already regularly used in about 140 countries but part of the healthcare systems of only a few.

China's 12th Five-Year Plan (2011-2015) earmarks financial support for TCM's globalisation. It also outlines plans for TCM's development and industry regulation.

'Despite TCM's popularity overseas, only a handful of countries, such as Singapore, legally recognise it,' the Beijing University of Chinese Medicine's former president Mr Long Zhixian said.

'Few countries include TCM in their healthcare systems.'

Artemisinin - a southernwood extract used to treat malaria - is the only TCM widely accepted abroad, mostly in Africa, Beijing University of Chinese Medicine professor Mr Gao Xuemin said. The World Health Organisation lists it in its essential medicines catalogue.

Several other traditional remedies, including those for cardiovascular diseases, are undergoing clinical testing overseas and may soon be approved for international use.

But Mr Long believes there are many obstacles to TCM's expansion in the global market.

Perhaps the most challenging is that TCM is based on traditional Chinese culture and philosophy. These include such concepts as the balance of yin (the cool, calming side of the body) and yang (the hot, stimulating side of the body), and the relationship of the five elements that are said to constitute the universe - fire, earth, metal, water and wood.

'Western culture is totally different,' Mr Long said. 'It's not easy for them to believe in TCM if they don't understand these theories.'

He says another difficulty is difference in scientific views. 'Westerners value experimental data in medicine, while TCM is based on experience accumulated over the past 4,000 years,' he said.

'They always try to understand TCM according to the Western medical perspective. But that doesn't make any sense. In my opinion, as long as a medicine cures, it's a good one.'

[TCM has to be differentiated from their herbalogy/apocathery section and their diagnostic, and their acupunture/moxibustion/philosophy/cosmology section. Herbalogy or herb lore may have some pharmacological effects that are provable, and it can be used.

The science of medicine and the art of healing is not always an exact science. There is as much psychology as there is physiology and biology. Much of medicine is about dealing with the patient. And medicine's effectiveness is as much a matter of placebo effect and expectations as it is pharmacological effects.

In many ways, the treatment is as much about making the patient feel better as it is about make the patient better. Our bodies are mostly quite able to heal itself given time. For chronic ailments, if TCM can provide (placebo) relief, it can be chearp and less dangerous than western drugs which try to do the same.]

More than 9,000 TCM treatments were approved for sale in the market in 2008, according to the White Paper on Status Quo of Drug Supervision in China.

These TCM treatments have all passed clinical safety tests. Most have a history of several centuries, Mr Long said.

'Current technology can't detect the active ingredients in some TCM compounds, which are very complicated,' he said.

Mr Long says it's difficult to determine the numbers and ratios of ingredients in most TCM compounds. Determining which are active ingredients is even more challenging. Artemisinin is an exception, which is why it has been successfully globalised.

TCM doctor Zhou Chaofan says another challenge to internationalisation is medicine export standards vary around the world, and China's standards often can't meet foreign countries'.

'Some TCMs use heavy metals, such as cinnabar and realgar, which may not meet some foreign countries' criteria,' Mr Zhou said.

Mr Long agreed. 'Standards for heavy metals are different in countries,' he says.

'It's hard to establish a global standard for TCM because of its complicated ingredients lists.'

But Mr Long remains optimistic. 'It's just a matter of time for TCM to officially enter the global market,' he said.

'We first and foremost must promote Chinese culture, so foreigners can understand TCM's philosophy.'

The market will surely open up if TCM can cure diseases Western medicine can't, he believes. And more experiments will provide clinical evidence of TCM's usefulness and show how it works.

Dozens of Western pharmaceutical companies are currently undertaking such research in hopes of entering the Chinese market as foreign brands.

'This is a typical approach,' Mr Long said. 'They first take notice of a TCM treatment and then research and finally produce it. But the impact on the Chinese market is limited.'

But some don't view TCM's prospects for internationalisation as so promising.

Among their ranks is Mr Fang Zhouzi, an academic known for his opposition to 'pseudoscience' and TCM.

'TCM theories are not scientific,' Mr Fang said.

'They're just an amalgam of superstition, metaphysics, philosophy and witchcraft. They should be replaced by better medical science. Some theories aren't logical at all, such as eating bones to strengthen one's bones.'

But time, tests and international opinion will tell whether TCM will become a basement of parochial quackery or a lofty pillar of global healthcare's architecture.

Era of Western domination 'is ending'

Nov 29, 2011

Professor Kishore Mahbubani was ranked on Foreign Policy magazine's list of the world's top 100 thinkers this week. He believes the era of Asian domination is returning and that greater global governance is needed in a more interdependent world.


By Cheong Suk-Wai, Senior Writer

AT A gathering of thought leaders two years ago in Davos, Switzerland, someone tapped Professor Kishore Mahbubani on the shoulder. As Prof Mahbubani, 63, recalls: 'It was Mr Jan Peter Balkenende, who was then prime minister of the Netherlands, and he said, 'Aren't you Kishore Mahbubani?'

'I said, 'Yes, how do you know me?' and he said, 'My mother asked me to read your book.''

That book is The New Asian Hemisphere, Prof Mahbubani's third. Published in 2008, it is about the resurgence of Asia and also a caution to a complacent West to rev up its competitiveness.

This week, Foreign Policy (FP) magazine named this veteran diplomat one of the world's 100 top thinkers, alongside investing oracle Warren Buffett, Microsoft co-founder Bill Gates and United States President Barack Obama. This is the third time Prof Mahbubani, a married father of three, has been listed thus. The first was in 2005, when he was named one of FP's top 100 public intellectuals; the second was last year when he was ranked 92nd. He is in the same position this year.

After 33 years in diplomacy - including as ambassador to the United Nations, with a stint as president of the UN Security Council - he is now dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, and professor in the practice of public policy.

I sat down with him last week to learn more from him about the US' renewed interest in Asia, among other concerns:

What do you make of China-US ties today?

In the last year or so, China has been trying to rise quietly without waking up the sleeping tiger that is the United States. But the tiger has been woken up. For a long time, the US viewed China's rise with a certain degree of equanimity. But it has suddenly become - I won't say alarmed - but concerned about that rise. When Mr Bill Clinton was president of the US, he was very laidback about China, and his successor George W. Bush was actually very good for China because he had the US fighting wars in Afghanistan and Iraq, and gave China a geopolitical window of opportunity to focus on its development. We are finally seeing the entire Washington establishment focused on China in a way it never was.

Which is ironic given how insular China's focus is, rarely on geopolitical concerns that aren't in its economic interest?

I would not say it has been necessarily insular. In fact, the Chinese have been quite proactive; for example, it shocked the world in 2001 by proposing the Asean-China free trade agreement (FTA), which was a bolt out of the blue for the Japanese. But China has deliberately continued to follow its former leader Deng

Xiaoping's policy of keeping a low profile - except in 2009 and last year when it made lots of mistakes, including with the visit of US President Barack Obama to Beijing, and declining to condemn North Korea's shelling of a South Korean island. These mistakes alarmed many, but China has since been working very hard to calm waters again - and has, so far, done so successfully.

Its continued claims in the South China Sea can't be calming.

Yes. China needs to spell out its position on this sea more clearly, especially as to how it is consistent with, say, the principles of the UN Law of the Sea Convention. It has to put up a case on the sea that is defensible under international law and they should learn from countries such as Malaysia and Singapore that have referred their disputes to the International Court of Justice, which is a valuable mechanism for resolving maritime disputes.

What do you make of Chinese thinker Yang Xuetong's suggestion that China has to have moral authority to defeat the US?

I like it. As he wrote in the International Herald Tribune on Nov 21: 'It is the battle for people's hearts and minds that will determine who eventually prevails. And, as China's ancient philosophers predicted, the country that displays more humane authority will win.' This is the kind of competition we want to see in Asia. In theory, the US has more soft power than China but, at the same time, China has increased its trade in the region much faster than the US has in recent times. The biggest challenge for the US in Asia is that its deeds have to match its words. So it has to deliver on the Trans-Pacific Partnership (TPP - a regional trade agreement currently being negotiated between the US and eight other Asia-Pacific countries, including Singapore). And if the US Congress does not support the TPP, the US will go nowhere in Asia.

The Chinese are going to try very hard to demonstrate to the rest of the world that its rise is good for the world. I actually believe that, because China alone has rescued 600 million people from absolute poverty; no other country in human history has ever done so. And China is also really investing in green technology, so there are many positive things that China is doing that often go unrecognised.

But who wants to be pro-Chinese?

You do not have to be. In fact, we are going to move away from a world where we try to be more Chinese or more American and move into a world where we are more of ourselves.

Is that why you are now writing a book on global governance?

I am trying to persuade countries, especially the big powers, that their national interest is aligned with greater global governance. In the past, the world's 193 countries were in separate boats; you just needed rules to make sure that these boats did not collide. Now, we all live in 193 separate cabins on the same boat and would want a captain and crew taking care of all on the boat; that is global governance.

The challenge is to persuade the great global powers that we need greater global governance and stronger multilateral institutions, which they think constrain their powers. It can be done if you appeal to their national interests.

Why are the great powers slow to embrace such long-term benefits?

Quite often, governments know what is the right thing to do. The Singapore Government's big strength is that it knows what is right and has the capacity to make long-term decisions, compared to, say, France and Italy, which do not have such capacity because it is sometimes politically impossible to do the sensible thing in many developed countries.

Why so?

If you look at the problems that are happening in the world today, from continuing unemployment in the US to the struggles of Greece, Italy and now Spain to regain growth, the reason why they are struggling so is they have not educated their populations that, with the return of Asia, they now have to retool their societies and become competitive again. The great myth and illusion that American and European politicians have engendered in their populations is, 'Don't worry, things will bounce back naturally.' That is not true.

So what is the true picture?

I am working on three sets of big ideas about that. First, we have reached the end of the era of Western domination of world history. Related to the first idea is the second one, which is the return of Asia.

Which means the return of an economic miracle?

It is not a miracle at all; in fact, it is a completely normal thing to have happened. From the year AD1 to the year AD1820, the two largest economies in the world were always China and India. It was only in the last 200 years that Europe and North America have taken off. These last 200 years, against the backdrop of the last 2,000 years, have been a major historical aberration and if you have such an aberration, clearly it has to end.

What is your third big idea then?

That in our new, smaller and interdependent world, we need greater global governance. The world's big states have progressively weakened multilateral institutions because those constrain their powers, whereas multilateralism increases the influence of a small state. But my argument is that it is now in, say, the US' interest to strengthen multilateralism because the US is also becoming interdependent on the rest of the world. We are all now interconnected so we have to work together to solve problems.

Singapore can be intellectual capital of Asia

FIRM and precise, Professor Kishore Mahbubani has long been a passionate champion of Asia and he is now looking forward to a cultural renaissance in the region, riding on the bracing confidence of its youth. Here he is on:


'It has the opportunity to be the intellectual capital of Asia because of the quality of its ideas. As an American thinker told me recently, 'I come to Singapore to get my geopolitical fix.''

The view that Singapore is too repressive for ideas to flourish here

'I disagree completely with that. Singapore has opened its door to many foreign universities; that's a sign that it is strong and confident enough to allow the marketplace of ideas to decide what is right and what is wrong.'

Critics who say his latest book, The New Asian Hemisphere, is an anti-Western polemic

'How can that be when I say the reason why Asians are succeeding now is that they have finally understood, absorbed and implemented the seven pillars of Western wisdom? Any Asian reading my book should send a thank-you note to the West for sharing that wisdom with him.'

The West's view of China

'China has been run by a communist party in 1949, 1979 and 2009. But Westerners don't see the change, whereas I've been dealing with Chinese government officials for 30 years and am absolutely astonished at how the younger ones among them are far more thoughtful and aware of the changing world than their Western counterparts.'

The Arab Spring

'It's a wonderful phrase but it conveys a false sense of hope about the future because the Arab world hasn't got middle-class populations yet, so its transition to democracy won't be as easy as it was for Eastern Europe, which already had a large, well-educated middle class when communism fell there.'

The idea of an Asian century

'I actually call it the Asian Millennium; I'm far more excited about the next 20 years than I have been about any other period of my life.'


Sunday, November 27, 2011

Contain China?

Nov 26, 2011

The Obama Doctrine is dangerous
By Hugh White

SINCE 2009, China's challenge to American primacy in Asia has become too stark to ignore. Last week President Barack Obama gave his response. On his Asian journey, he enunciated what truly deserves to be called the Obama Doctrine. It is perfectly clear. The United States will resist China's challenge to its primacy in Asia, using all the instruments of its power to strengthen and perpetuate the preeminent leadership it has exercised in the region for decades.

Mr Obama also sketched plans to implement this doctrine by reorganising Asia under new US-led regional structures which exclude China. His Trans-Pacific Partnership creates a new economic framework for the Asia-Pacific without China, while an expanded defence presence in Australia signals his aim to build armed strength in Asia and draw friends and allies into a larger and tighter strategic coalition against China's growing military weight.

Of course, Mr Obama hopes that the resolve he has shown will persuade China to drop its challenge and accept US leadership once more. But his doctrine clearly implies that if China cannot be persuaded, it will be compelled. This is very ambitious. Indeed it is America's most ambitious new strategic doctrine since Truman committed America to contain the Soviet Union.

Some will dispute that comparison. They will say the policy is not containment, and the adversary is not the Soviet Union. But think about it. America's aim is to resist an expansion of China's influence in Asia by building an economic and strategic coalition of friends and allies around its geostrategic periphery. The Obama Doctrine lacks the ideological dimension of Cold War containment - but it mirrors the geostrategic and political essence of the Truman Doctrine. It walks like a duck and quacks like a duck.

And is China the Soviet Union? In many ways it is not. China is still much weaker militarily than the Soviets were, and less threatening. But relative to the US, China is much richer than the Soviets ever were, and that makes it in the long run a much more formidable adversary. Indeed it is the most formidable strategic competitor America has ever encountered, because it is the only one ever to approach the US so closely in sheer economic weight. And that has nothing to do with overblown doom-saying about American decline. It simply flows from China's remarkable growth.

These sobering reflections prompt two critical questions: Where does the Obama Doctrine lead? And what are the alternatives?

Where it leads depends first on the Chinese. The idea that they will simply cave in is just wishful thinking. That leaves only two possibilities. One is that China's economy stumbles. This seems to be what Mr Obama expects. He clearly had China in mind when his major speech in Canberra last week foreshadowed the failure of any country which is not a democracy. Maybe he'll be proved right. But people have been predicting the failure of China's Market-Leninist model for 30 years now, and for 30 years the model has delivered growth at 10 per cent per year. Americans would be unwise now to assume that China will fail any time soon.

If it doesn't, we can expect China to push back against the Obama Doctrine. And we can assume that America will then push back in turn. What follows then is steadily escalating strategic competition between two very powerful rivals, playing out in a setting that gives China big asymmetrical advantages. That will carry immense costs for America, and even bigger risks.

One risk is that escalating strategic competition will disrupt the vital economic relationship between the US and China. Many hope that the two countries' deep interdependence will prevent their rivalry getting out of hand. But that will happen only if both sides are willing to forgo strategic objectives to protect their economic cooperation. With the Obama Doctrine, the President has declared that he has no intention of doing that. Why should we expect the Chinese to act any different? So it is more likely that escalating rivalry will soon start to erode economic interdependence between the two nations, at great cost to both.

The other risk is the growing chance of conflict. A war with China over Taiwan or the Spratly Islands is simple to start but hard to end, and could very easily escalate. China is a nuclear-armed power capable of destroying American cities, and the threshold for nuclear exchanges in a US-China clash might be dangerously unclear and disastrously low.

So the Obama Doctrine seems to lead in some very dangerous directions. Those dangers might nonetheless be worth running, if the only alternative was to stand back and let China take over Asia. And many people see us facing this stark choice - a choice between re-asserting US primacy in Asia and abandoning the region to Chinese hegemony.

But these are not the only possibilities. We can imagine an Asian future dominated neither by America or China. Beijing and Washington could share power, each balancing and restraining the other. This would be much less congenial to most of us than the uncontested US primacy of the past 40 years. But it would be much better than the escalating rivalry that looms today, and much better too than unrestrained Chinese hegemony.

Of course this could work only if both China and the US agree to make it work. We cannot be sure that such an agreement has ever been possible. But it was always worth exploring. The window for doing that was never large, and is closing fast. The way things are going, the two countries will soon be so deeply entrenched in rivalry that a deal like this becomes impossible.

That's why the Obama Doctrine is a very serious mistake. It commits America to a strategic confrontation which will cost it dearly, which it might not win and which it could quite possibly avoid without sacrificing its vital interests in Asia. America should step back from the Obama Doctrine and explore the possibility of a deal with China to build a better basis for peace in the Asian Century.

That will not be as popular with today's American voters as the muscular resolve he showed in Asia last week. But it might earn him the gratitude of their grandchildren, which was how Bismarck defined the difference between a politician and a statesman.

The writer is professor of strategic studies at the Australian National University in Canberra and a visiting fellow at the Lowy Institute in Sydney.