Islands in the South China Sea

Sep 13, 2012

Truth the first casualty in tussles over islands

By ian buruma


THEY don't look like much, those few uninhabited rocks in the East China Sea between Okinawa and Taiwan, and a couple of tiny islets in the Sea of Japan, inhabited by a few token fishermen and some South Korean Coast Guard officials. The former, called the Senkaku Islands in Japan and the Diaoyu Islands in China, are claimed by China, Japan and Taiwan; the latter, called Takeshima in Japan and Dokdo in Korea, are claimed by South Korea and Japan.

These tiny outcroppings have little material value, and yet the dispute over their ownership has led to a major international dust-up. Ambassadors have been recalled. Massive anti-Japanese demonstrations have been held all over China, causing damage to Japanese people and properties. Threats fly back and forth between Tokyo and Seoul. There has even been talk of military action.

The historical facts actually appear quite simple. Japan grabbed the islands as part of its empire-building project after the Sino-Japanese war in 1895 and the annexation of Korea in 1905. Prior sovereignty is unclear; there were fishermen from Japan in Takeshima/Dokdo, and some awareness of the Senkaku/Diaoyu in imperial China. But no formal claims were made by any state.

Things became more complicated after World War II. Japan was supposed to return its colonial possessions, but the United States took over the Senkaku Islands along with Okinawa, before returning both to Japan in 1972. The Koreans, still enraged at Japan for almost a half-century of colonisation, took the Dokdo Islands without worrying about the move's legality.

Given the brutality of the Japanese occupations of Korea and China, one is naturally inclined to sympathise with Japan's former victims. The fiery emotions inspired by this dispute - some Koreans even mutilated themselves in protest against Japan - suggest that the wounds of the Japanese war in Asia are still fresh. Indeed, South Korean President Lee

Myung Bak has used the occasion to demand a formal apology for the war from the Japanese emperor, and financial compensation for Korean women who were forced to serve Japanese soldiers in military brothels during the war.

Unfortunately, the Japanese government, despite much circumstantial and even documentary evidence supplied by Japanese historians, now chooses to deny the wartime regime's responsibility for this ghastly project. Not surprisingly, that stance has further inflamed Korean emotions.

And yet it would be too simple to ascribe the current dispute entirely to the open wounds of the last world war. Nationalist feelings, deliberately stirred up in China, South Korea and Japan, are linked to recent history, to be sure, but the politics behind them is different in each country. Since the press in all three countries is almost autistic in its refusal to reflect anything but the "national" point of view, these politics are never properly explained.

The communist government in China can no longer derive any legitimacy from Marxist, let alone Maoist, ideology. China is an authoritarian capitalist country, open for business with other capitalist countries (including deep economic relations with Japan). Since the 1990s, therefore, nationalism has replaced communism as the justification for the one-party state, which requires stirring up anti-Western - and above all, anti-Japanese - sentiment. This is never difficult in China, given the painful past, and it usefully deflects public attention from the failings and frustrations of living in a dictatorship.

In South Korea, one of the most painful legacies of the Japanese colonial period stems from the Korean elite's widespread collaboration at the time. Their offspring still play an important part in conservative politics in the country, which is why Korean leftists periodically call for purges and retribution. President Lee is a conservative, and relatively pro-Japanese. As a result, the Japanese view his recent demands for apologies, money and recognition of South Korean sovereignty over the islands in the Sea of Japan as a kind of betrayal. But, precisely because Mr Lee is regarded as a pro-Japanese conservative, he needs to burnish his nationalist credentials. He cannot afford to be tainted with collaboration. His political opponents are not the Japanese, but the Korean left.

The use of the war to stoke anti-Japanese feelings in China and Korea is annoying to the Japanese, and triggers defensive reactions. But Japanese nationalism is also fed by anxieties and frustrations - specifically, fear of rising Chinese power and Japan's total dependency on the US for its national security.

Japanese conservatives view their country's post-war pacifist Constitution, written by Americans in 1946, as a humiliating assault on Japanese sovereignty. Now that China is testing its growing power by claiming territories, not just in the East China Sea but also in the South China Sea, Japanese nationalists insist that Japan must act as a big power and be seen as a serious player, fully prepared to defend its sovereignty, even over insignificant rocks.

China, South Korea and Japan, whose economic interests are closely entwined, have every reason to avoid a serious conflict. And yet all three are doing their best to bring one about. For entirely domestic reasons, each country is manipulating the history of a devastating war, triggering passions that can only cause more damage. Politicians, commentators, activists and journalists in each country are talking endlessly about the past. But they are manipulating memories for political ends. The last thing that interests any of them is the truth.

Ian Buruma is professor of democracy and human rights at Bard College in the United States.

-------

South China Sea: Not Just About “Free Navigation”

BY DENNY ROY

Denny Roy, Senior Research Fellow at the East-West Center, explains that “China is trying to implement a might-makes-right order, while the United States is trying to ensure that smaller countries do not get steamrolled. This is the real issue, and US officials should make it clear.”


The South China Sea territorial dispute increasingly looks like a point of strategic friction between the United States and China after a nasty exchange between the two governments earlier this month. The US Department of State criticized China for its plan to base a new military garrison in the Paracel Islands, saying this would increase international tensions. Beijing shot back that the United States should mind its own business. Many observers wonder why Washington and Beijing are allowing a new irritant to emerge in the incalculably important US-China relationship. Unfortunately, there is widespread misunderstanding about the US rationale for America’s diplomatic intervention in a territorial dispute to which the United States is not a party. Although US officials have named several specific US concerns about China’s policies and activities in the South China Sea, the US concern most widely understood and repeated is the potential threat to “freedom of navigation”: the PRC might be moving toward imposing restrictions on foreign ships sailing in the South China Sea. This, however, is not the real issue. It is really about bullying.

To be sure, the United States is a strong proponent of freedom of navigation in international waters. This stance reflects not only America’s commitment to the general principle of liberty but also the interests of a trading nation with the world’s most capable navy. There should be no doubt that if freedom of navigation was in jeopardy in the South China Sea, the United States would spring to its defense. At present, however, freedom of navigation is not at issue.

The Chinese say they do not interfere with international navigation in the South China Sea and do not intend to in the future. Their position has some merit. China has a particular beef with surveillance by US ships and aircraft near the Chinese coast. This has resulted in Chinese harassment, with several incidents reported in the press. The UN Law of the Sea Treaty allows for spying in the region between a country’s internal waters limit—12 nautical miles—and its exclusive economic zone limit which is usually 200 nm.

The Chinese argue that spying is not “innocent passage” and should not be allowed within the EEZ. It is not an unreasonable argument. So this situation has resulted in some interference with the “free navigation” of the US Navy, but this is a very limited and special case. The other circumstance in which Chinese vessels have interfered with non-Chinese ships is when the latter are engaged in activities that involve taking resources— fishing or preparing to drill for hydrocarbons—or when foreigners are attempting to arrest Chinese fishermen. These, as well, are special cases. Otherwise, the Chinese have not interfered with the passage of cargo ships of any flag or of US Navy vessels passing through the waterway.

Consequently, the Chinese assert that the freedom of navigation argument is bogus, and the assertion is persuasive to many neutral onlookers. From here the Chinese charge that the Americans are using freedom of the seas as a pretext to extend the alleged “containment” strategy to Southeast Asia, limiting Chinese influence and recruiting new allies to join in the military encirclement of China.

Instead of providing fodder for Chinese rhetoric, the freedom of navigation argument should remain in the background. Rather, what the US government should be talking about is making the world safe from unlawful international coercion. Ironically, the Chinese have begun practicing what Beijing’s diplomats have for decades condemned as “hegemonism” or “power politics”—strong countries forcing their self-interested preferences onto smaller countries.

Six governments claim ownership of parts of the South China Sea. None has a slam-dunk case. China is not the only claimant that has moved unilaterally to strengthen its control over South China Sea territory and resources in recent years. China, however, has distinguished itself in two important and negative ways. First, China’s claims are both unusually expansive and intentionally vague. Beijing has stubbornly refused to clarify its claims based on the guidelines in the international Law of the Sea treaty, to which the PRC is a signatory. This is part of a strategy of ambiguity by which the PRC tries to minimize global concern and to avoid being constrained by the Law of the Sea guidelines while taking actions aimed at intimidating individual rival claimants.

Second, the actions China has taken to assert ownership over the South China Sea and its tiny “islands” are stronger than those taken by the other claimants. These acts include threatening and damaging foreign ships, declaring a fishing ban for part of the year in half of the South China Sea and arresting foreign fisherman who do not comply. There is also the recent announcement of increased Chinese militarization of the region—not only the new garrison, but the statement by PLA spokesman Geng Yansheng in June that China has begun “regular, combat-ready patrols” in the South China Sea.

China’s actions are threatening because China is big. No other state in Southeast Asia can match the military power China is able to project into the South China Sea. China’s massive economic weight, rapid growth rate, and commitment to strengthening its military forces ensure that the gap will only grow larger in the future. To make the contest even more lopsided, the Chinese government recently announced plans to greatly increase the number of quasi-military patrol ships—operated by the PRC Coast Guard and other agencies—it will deploy in the South China Sea.

In effect, this is a struggle between two visions of international order for Asia. The US vision includes a system of norms and international laws that ensure, among other things, that small states are protected from predation by larger states and that dispute resolution procedures should be fair.

China, on the other hand, appears to favor restoring a Chinese sphere of influence in East and Southeast Asia such as the Middle Kingdom enjoyed anciently. Under this arrangement, the rules of international interaction would reflect basic Chinese interests. Beijing would expect regional governments not to take major decisions that run contrary to Chinese preferences. Beijing’s current unwillingness to base Chinese claims in the Law of the Sea treaty may reflect the sentiment that this mostly Western-written body of law will not be needed when China resumes its historical position of regional dominance.

Some observers see the China-US contention over the South China Sea as simply a squabble between two great powers that are both seeking regional domination. Each is acting in its respective hegemonic self-interest rather than in defense of some higher principle. In this case, however, US intervention is clearly aligned with the interests of the Southeast Asian countries, which seek to avoid domination by China or any other great power. China is trying to implement a might-makes-right order, while the United States is trying to ensure that smaller countries do not get steamrolled. This is the real issue, and

US officials should make it clear.

Shoebox units

Sep 12, 2012

The rise and rise of shoebox units
 

LAST week, the Government announced new rules to cap the supply of so-called "shoebox" units - tiny residential units - in the market. The move suggests some discomfort with the proliferation of such units in recent years. The Government projects an increase in the number of shoebox apartments from the current 2,400 to 11,000 by 2015.

But why has this sub-sector of the housing market boomed? And what are the issues that arise if more such units are built?

The recent mushrooming of shoebox apartments has raised some concerns about the liveability and sustainability of such apartments, which generally refer to units having a gross floor area of less than 50 sq m.

Are shoebox units inhumane?

This article does not intend to debate the question of what should be a socially "optimal" housing size for the average person or family.

It will examine some possible factors influencing the recent increase in the number of shoebox apartments.

Our discussions focus on the supply, demand and demographic-related factors that affect the shoebox apartment market.

What impact do shoebox apartments have on other owners in similar projects? What potential spill-over effects will a rising trend of shoebox apartments have on the property market?

Rising land costs and shoebox developments

PROPERTY is made up of two components - land and building structure. In most parts of the world, supply of land is typically inelastic. In Singapore, land is largely state-owned; land is sold for development through the Government's tender exercises.

In a competitive market, bidding by a large number of developers in a tender process will drive up land prices to a level that dissipates excess profits of developers. When land prices increase, developers will have to increase property prices in order to earn profits.

If the marginal costs of construction for large units and for small units are not significantly different, developers adopting the shortest "time-to-market" strategy will build apartments with large floor areas.

However, if shoebox units were to be built, developers will have to find more buyers to purchase the units to be built on land with the same permitted density.

Shoebox units are priced at a premium on a per unit floor basis; absolute prices of shoebox units are smaller relative to large apartment units. The price differential strategy is usually found in markets with segmented demand.

Who buy shoebox units? Are they for investment or owner occupation?

Shoebox units are usually built on land located near the city centre, where per square foot prices of the land are high.

Renters, comprising mostly expatriates working in the Central Business District, will choose to live in shoebox units on the city fringes.

Attractive rental yields draw strong investor demand for shoebox units, especially those located near the city areas (core central region).

The new Additional Buyer's Stamp Duty that significantly increases transaction costs for high-end residential properties could channel some cash-constrained speculative demand to the shoebox market.

Younger couples, who have limited equity to make down-payment, form another potential segment of the shoebox market.

This includes the "sandwiched" class of buyers, who are ineligible for subsidised public housing on one hand and priced out of the private market on the other hand, when strong housing price increases spill over to the suburban market in recent years.

These young couples, who buy shoebox units for occupation purposes, are more price-sensitive and they do not have strong preference to live near the city areas. The rising number of shoebox apartments in the suburban areas could have been built by developers to meet the demand from this group of young buyers.

The third segment includes older homeowners, who downgrade to shoebox units as a way of cashing out equity gains accrued to their existing houses. The housing "wealth" is accrued to the households due to appreciation in housing prices.

Demographic changes and consumption preference

CHANGES to population demographics in Singapore due to an ageing society, low fertility, dwindling family size and increase in foreign population have caused shifts in preferences for housing types. With high housing prices, the purchase of apartments with large floor space is no longer a necessity for many households.

Older households, whose houses have appreciated in value, will seize the opportunity to cash out their housing wealth. Empty-nest households will also downgrade to smaller apartments when their children are grown up and form their own families.

Younger households, who face "liquidity" constraints as they embark on their new careers, are likely to choose shoebox apartments so that they can still indulge in other lifestyle consumption, such as holiday trips, cars and expensive audio-visual systems.

Possible implications

DO SHOEBOX apartments cause inefficient use of land resources? In a competitive market, high land costs are likely to eliminate inefficiency, in the economic sense, in land use.

It is, however, difficult for the market to resolve the social "optimal" issue in terms of minimum floor space for the shoebox units. Stories of large families squeezing into a small house in kampungs were common in the old days.

Thus, the issue of living space is a complex and subjective one, driven by differing factors and circumstances.

What possible impact do shoebox apartments have on condominium living and housing prices? By sub-dividing space enveloped within buildings into more, smaller-sized units, density that is measured by number of people living in the same space will increase.

If public amenities and facilities, such as swimming pools and fitness centres, and other common space are not adequately expanded to meet the demand, overcrowding and overuse of facilities could arise. This is a problem known as the "tragedy of the commons" in environmental goods.

If shoebox units are transacted at higher price premiums and generate more market volatility, the price spillover could affect other segments of the market if small-unit effects are not separated from the price information.

Capping supply

CAPPING the supply of shoebox units for non-landed developments reduces "negative externalities" associated with overcrowding within developments and congestion around neighbourhoods and towns outside the central

area. It also indirectly alleviates price pressure brought by buyers of shoebox units on the broader housing market.

This supply-side control mechanism is just a guide. Market forces will, however, determine an optimal housing mix that gives the highest economic returns.

This article discusses some possible hypotheses that explain the social and economic behaviour in the shoebox apartment market.

We do not claim to have answers to all the questions. More empirical data on buyers of shoebox units and transaction prices, if it could be collected, will help to verify some of the causal effects to be discussed in the future.

Associate Professor Agarwal Sumit, Professor Deng Yongheng and Associate Professor Sing Tien Foo are from the Institute of Real Estate Studies, National University of Singapore

FOREIGN WORKERS DEBATE

Sep 10, 2012

Employers, speak now or pay the price

The debate on foreigners has been too one-sided, with citizens grousing about there being too many foreigners. Employers need to speak up on the impact if the tap is overtightened.
 
By Leslie Fong For The Straits Times
 

HERE is a provocative suggestion - roster every HDB household to do estate cleaning at least once a month.

I offer it only half in jest, after reading in The Straits Times last Thursday that the management committee of Braddell View estate had called for volunteers to help clean up the precinct. Apparently, the ongoing curb on employing foreign workers had resulted in poor service by the fewer cleaners left behind to do the job, despite a 30 per cent hike in their fees.

I understand the committee's desperation - but volunteers? Is it serious? Let's get real.

Its only option, apart from jacking up cleaning fees sky-high, is to try compulsion via rostering. But that is bound to set HDB residents screaming blue murder, so loudly that even Johor Baru will hear them. They will protest that they are already paying for cleaning, and therefore do not see why they should be made to go sweep corridors, void decks and so on. I bet they will not be persuaded even if, in return, the cleaning fees they now pay are waived.

It should be obvious that no estate management committee or town council will ever contemplate so politically suicidal a move as to force residents to get to work with their brooms and mops.

Then why suggest it?

Well, my hope is that it will prompt enough readers to pause and ponder the point I am trying to make, which is that this country needs foreign labour to keep it going.

Life as Singaporeans have lived it will be a lot more expensive and uncomfortable without foreigners doing the dirty or menial jobs they would not dream of doing.

Not true? Just think for a moment what would happen if it were possible to arrange for all foreigners employed here to stop work for a month. Utter chaos will follow. There will be few Singaporeans to collect rubbish, build flats, lay sewerage pipes and power lines, drive buses and trains, provide nursing care and other support services in hospitals, keep factories, shops, restaurants, hawker centres and so on in running order... the list goes on.

And I have not even mentioned maids.

Some quiet reflection on this bleak scenario will get more Singaporeans to appreciate the presence of foreign workers than the "Immigration Bonus" proposed by three academics. In their opinion piece in The Straits Times on Aug 8, researchers Yolanda Chin, Norman Vasu and Nadica Pavlovska from Nanyang Technological University argued that money can be raised from levies on foreign workers, and then distributed to citizens as a tangible benefit derived from Singapore's open-door immigration policy.

Without putting too fine a point on it, what they are advocating is using money raised from taxing the blood, sweat and tears put in by foreign workers, albeit paid by their bosses, to appease the anti-immigration lot. I would call that bribery.

That notwithstanding, the bonus idea will not work because, as bribes go, whatever amount that is ultimately distributed to every citizen is likely to be so paltry as to invite derision rather than the desired appreciation.

What I find even more unsettling about their proposal is the underlying message of appeasing those strident voices who have been clamouring for a clampdown on admitting foreign workers and who appear to have hijacked what should have been a calm, rational debate on an issue of grave importance to the economy and lives of all Singaporeans.

As it is, these vehement voices have succeeded in some measure in pressuring the Government to tighten the issuing of work permits and employment passes to foreigners, often to the detriment of businesses already reeling from the worldwide economic downturn and the greed of local landlords. Thus emboldened, they can only get more rabid.

This is why I feel compelled to write to remind the powers that be that there are others in Singapore who look askance at the sweeping demonisation of foreigners by those who, for whatever reasons, are ever eager to blame immigration for everything that is not going right, from crowded trains to escalating property prices.

More to the point, I fear the cascading effects on the economy of businesses forced to scale down or close altogether because they cannot find sufficient workers.

Yes, the influx of foreign workers has been at a pace the infrastructure cannot cope with - but must the swing to the other end of the pendulum be halted only after enough Singaporeans have been thrown out of their jobs because their companies just cannot carry on or have decided to relocate elsewhere? I am sure I am not the only one worried about the choking effect of a drastic cutback in much-needed foreign labour.

I expect this rejoinder: Businesses should automate, raise productivity and pay better wages to get Singaporeans, rather than rely forever on cheap foreign labour. And I say yes, I agree - but up to a point.

Some jobs just cannot be automated or re-engineered. It is hard to replace chambermaids or hospital attendants with machines, and there is a limit to the productivity that can be squeezed out of them. An attendant trying to push two wheelchairs at the same time is not more productive, but a menace to his patients' safety.

Pay more, sure, but how much more without adding substantially to higher prices for all? Let me illustrate with a real-life example.

I know of a supermarket chain at its wits' end trying to recruit Singaporeans to man its checkout lines. It tried all possible avenues, including organisations helping former convicts and disabled people. In a recent exercise aimed at hiring about 60, a grand total of two Singaporeans accepted. One quit after three days, not bothering even to collect his wages.

How much does it pay a checkout line cashier? A basic monthly salary of $1,200. Well, why not $2,000, an increase of 67 per cent? That should attract enough Singaporeans, no?

Assuming that is so, a mini- mart with five checkout lines needing 12 cashiers to work two shifts seven days a week will be looking at a hike in cost of $145,000 per annum (including Central Provident Fund contributions). The biggest store in this chain needs 90 cashiers for two shifts.

And that is not all. There will be a knock-on effect. The supervisors of cashiers will have to be paid more, as do the junior managers. And so up the line it goes. It does not take a genius to figure out that the supermarket chain will have to pass on the increased cost to consumers, who then have to pay more for groceries.

This will be the scenario played out at every business that cannot get enough local workers either because they find the salaries offered too low or, as is often the case, they do not want those jobs at all.

Hence while I accept that too easy an access to foreign labour does press wages down for Singaporeans at the lower rungs of the ladder, I caution against reaching for easy answers like clamping down on foreign workers across the board or forcing wages up with nary a thought about the impact on inflation and Singapore's competitive advantage.

In this regard, Singapore is caught between a rock and a hard place, largely because its citizens have not been reproducing themselves adequately, whether as a result of a too-successful family planning programme in yesteryears or a lifestyle choice in more recent decades.

[I don't disagree that we need to replace ourselves, but we are not going to be content with our kids being cashiers or cleaners or construction workers. Even if we had responded to the call to raise the TFR in 1984, it would only be about 10,000 more babies born in 1985 (assuming there were enough maternity beds, and nurses), and they would have just entered the workforce about 2 - 5 years ago. I do not see how the 50,000 or so extra Singaporeans (the extra 10,000 each from 5 cohorts), would have made a dent in the 1.3m foreigners now working in Singapore. The fact is even if we are raising our TFR, we would still be short of workers, and we would still need foreign workers.]

Collectively, all have contributed to the severe shrinkage of the indigenous workforce, including the ones who have been agitating the most against the employment of foreigners to make up the shortfall.

That is water under the bridge.

Until the happy day when Singaporeans produce many times more babies than they do now, the country will have to continue to grapple with balancing the inflow of foreign workers with moves to improve the lot of low- wage groups.

The debate should be centred on how many foreign workers are too many, not just shutting them out. Is the existing "too many" really too many if not enough Singaporeans are willing to fill the jobs those "too many" are doing?

And therein lies the problem - there is plenty of sound and fury but not enough data in the public domain on how many jobs in which sectors are going a-begging, and whether employers really have no choice but to fill them with foreign hires.

Thus far, only one side of the story has been ventilated - loudly, sometimes belligerently. The employers have not been heard enough.

If they - or whoever else has done the hard calculations on what the clampdown thus far has or will cost their businesses and Singapore's economy - do not speak up, then they will lose the debate.

And all of us will have to pay for it.

The writer, the former editor of The Straits Times, is the senior executive vice-president for marketing at Singapore Press Holdings.

Silver-Haired Shoplifters On the Rise In Japan

By Blaine Harden

Washington Post Foreign Service
Sunday, November 30, 2008 


SAPPORO, Japan -- Criminology is being stood on its head in fast-graying Japan.

Here on the cold northern island of Hokkaido, history was made in 2006 when total arrests of elderly people exceeded arrests of teenagers. The elderly accounted for 880 arrests, mostly for shoplifting, while teens were nabbed 642 times. Since then, elder crime has surged. For every two teenagers arrested on this island, police collared three people 65 and older.

The trend echoes across Japan, where crimes committed by the elderly are increasing at a far faster pace than the elderly population itself.

While the 65-and-older population has doubled in the past two decades, crime among the elderly has increased fivefold, according to government statistics released this month. Japan's overall crime rate, always low by world standards, has fallen for the past five years.

"We never dreamed we would be focusing on these old people," said Hirokazu Shibata, a Hokkaido police official who leads a crime prevention task force. "Theft used to be a crime of the young, but now it is overwhelmingly a crime of the old."

Around the world, criminologists have found that the propensity to commit crime peaks in the late teens and early 20s, and falls off steadily as people age. But Japan, with the world's oldest population and lowest proportion of children, is headed into uncharted waters for criminal behavior. Experts here predict that the entire country, like Hokkaido, will soon record more arrests of the old than of the young.

The elderly in Japan are committing crimes -- nearly all of them nonviolent offenses, mostly petty theft -- because of loneliness, social isolation and poverty, according to a Justice Ministry white paper released this month. 

"When people feel lonely, there is an impulse to commit a crime so they will somehow connect with someone," said Shibata, whose task force has questioned 220 elderly people arrested mostly on charges of theft.

Shibata and other police in Hokkaido have also found what they describe as a consistent pattern of isolation and anxiety among elderly people who commit crimes.

"They are not in touch with their children and have no connection with their brothers and sisters," Shibata said. "These are people who worked so hard for so many years for their companies and for their country. All of a sudden, all their work has come to nothing. They have empty time on their hands."

A desperate desire for human contact or for novelty in their lives leads many elderly people to shoplift, experts say.

"They want somebody to talk to," said Hidehiko Yamamura of National Shoplifting Prevention Organization, a nonprofit group in Tokyo. "If they get caught, they can talk to the police. They are very easy to catch." 

Here in Sapporo, police in September arrested a 71-year-old retired man in a grocery store after he tried to steal 14 items, including ice cream, worth $27. He told police that he often shoplifts.
The man receives a social welfare check for about $1,600 a month and lives with his wife, who is ill and unable to do housework. He told police that his wife's illness caused him stress but that when he steals, he feels "refreshed."

At the time of his arrest, he had $7,500 in cash in his pocket. He told police that he preferred not to spend money on groceries.

This country of 127 million has the oldest population on record. Slightly more than 22 percent of residents are 65 and older. (In the United States, about 12 percent of the population is that age.) For the first time in Japan's history, people 75 and older make up more than 10 percent of the population.
The number of children, meanwhile, has declined for 27 consecutive years. Demographers say the elderly -- who tend to live longer in Japan than elsewhere -- will continue to increase until 2040, when they will outnumber the young by nearly 4 to 1.

To slow the growth of elder crime, the Justice Ministry recommends that the government create programs to stabilize the lives of those older than 65, financially and socially.

The government, though, has moved in the opposite direction in recent years. As many as 64 million government pension records have been lost as part of a botched effort by the Ministry of Health and Welfare to computerize the pension system. Despite government reassurances, the loss of the records has frightened the elderly, many of whom are concerned that there will be no pension for them in the future, said Koh Fukui, an official of the shoplifting-prevention group.

"Some elderly people are shoplifting because they feel that with all the problems of the pension system, they should save their money for the future," he said.

A government survey of 137 elderly shoplifters in Tokyo found that a desire to "cut back on spending" was a primary motivation of 59 percent of the women arrested. Two-thirds of men said they stole because of their tough financial situation.

The global financial crisis, which has plunged Japan into what economists predict will be a severe and protracted recession, is likely to limit the government's ability to spend more on programs for the elderly. Spending is also limited by the government's enormous debt burden, the highest among wealthy countries, which amounts to 182 percent of gross domestic product.

Police and nonprofit groups say few organizations in Japan are able to provide counseling for the elderly, either before they are arrested for shoplifting or after they have been taken into custody.
Elderly people accused of petty theft are usually released after a warning if they show remorse, police say. In most cases, prison terms are given only to serious repeat offenders.

When the elderly are released from prison, most return to the same isolated lives that helped push them into petty theft, police say.

In supermarkets and convenience stores across Japan, public-awareness campaigns to prevent theft have been hindered by foot-dragging among store owners, who do not want to offend loyal customers.

"There is resistance to putting up posters saying, 'Shoplifting is a crime,' " said Fukui, of the prevention group. "Merchants don't want their customers to think that they are regarded as potential shoplifters."

Special correspondent Akiko Yamamoto contributed to this report.

Ex-AMP head critiques 'myth of meritocracy'

Sep 09, 2012
 
By andrea ong
 

A former chairman of the Association of Muslim Professionals (AMP) yesterday critiqued the "myth of meritocracy" at the core of the Singapore system.

Mr Nizam Ismail, 45, also took issue with Minister of State Halimah Yacob's National Day Rally speech, saying it suggested that the reason the Malay-Muslim community has not succeeded "as much as we can is because we did not work hard".

Her statement took a "very broad-brush approach" that ignored real problems, he said, adding that meritocracy glosses over social inequality.

Mr Nizam was speaking at an AMP dialogue on the National Day Rally.

He pointed to "stubborn gaps" that the Malay-Muslim community faces in education and issues like juvenile delinquency and high divorce rates. Without addressing inequality, these gaps will widen, he said.

In his view, meritocracy also breeds elitism when those who succeed think they deserve it and look down on those who fail.

"I fear that perception is already ingrained in the minds of our policymakers," he said.

He suggested it was time to look at some forms of affirmative action.

Three other speakers spoke at the forum, including Economic Society vice-president Yeoh Lam Keong, who said the Malay-Muslim community's economic vulnerability at the bottom of the income ladder is its Achilles' heel. It threatens to undermine its main strength - strong social cohesion.

He called for the Government to move back to its old stance of "thoughtful government intervention" in public service areas where the market does not do a good job. He named six key social policy areas which need rethinking and restructuring: the social security system and safety net, public housing, education, health care, public infrastructure and transportation, and population and immigration policies.

Mr Yeoh said public housing used to be affordable, with flats priced at two to three times annual income. Now, as a result of public housing being pegged to market prices, it has become markedly more unaffordable and threatens to become even more so.

He referred to former senior parliamentary secretary Mohamad Maidin Packer's open letter to Prime Minister Lee Hsien Loong. Mr Maidin had touched on housing and immigration to warn of the eroding social compact and trust between Government and people.

Agreeing strongly, Mr Yeoh said if wide-ranging social reforms in these areas are not put in place, "unfortunately, one of the most relatively negatively affected are likely to be members of the Malay-Muslim community".

Dr Faizal Yahya of the Institute of Policy Studies warned that with many Malays working in the manufacturing sector, there will be implications as Singapore moves to a service and knowledge-based economy.

Also discussed yesterday was Our Singapore Conversation. Mr Nizam and lawyer and Aware activist Halijah Mohamad said the conversation should include alternative views and the voices of civil society.

Separately, the Singapore Democratic Party also held a forum yesterday to discuss issues faced by the Malay-Muslim community and the role it plays in Singapore's future.

Social spending - where will money come from?

Sep 04, 2012
 
Eye on the Economy
 
By Aaron Low Economics Correspondent
 

THE debate on increasing Singapore's social spending centres on two questions.

The first is: How much more to spend? The next: How to fund it?

On the first, the Government has already started to commit itself to significantly higher spending. This has come about in response to two key trends. Singapore's ageing society and widening income inequality mean the Government will have to spend more on health care for the elderly; and on social spending to level up the playing field and to redistribute income.

As Prime Minister Lee Hsien Loong said in his Aug 26 National Day Rally speech, "nothing falls from heaven". So taxes will have to go up eventually to fund higher social expenditures - "not immediately" but within the next 20 years.

Annual health-care spending will double to $8 billion over the next five years. This year, the Government introduced the permanent GST Voucher, which pays out a combination of cash, conservancy rebates and Medisave top-ups, with more for older and lower-wage Singaporeans, to offset increases in the goods and services tax. This will cost the Government $680 million this year.

Also formalised in 2007 is the Workfare Income Supplement, which supplements low-wage workers' income with cash and Central Provident Fund (CPF) top-ups. This cost the Government $260 million last year.

Plans are also under way to spend $60 billion over the next 10 years to improve the transport system.

All that adds up to rising expenditure for the Singapore Government. In the last financial year, the Government collected $50.5 billion in tax revenues and charges. It spent $47.5 billion, resulting in a primary surplus of about $3 billion.

But the Government also spent $8.58 billion of special transfers on programmes such as Workfare, and top-ups to various endowment funds, such as the Medical Endowment Fund.

To make up the shortfall, the Government tapped $7.91 billion of returns from investment income from its reserves. This is known as Net Investment Returns (NIR).

After deducting and adding all the elements, the Government had an overall net surplus of $2.32 billion last year.

At a time when developed countries in Europe and the United States are drowning in sovereign debt, Singapore's fiscal position is much envied and admired.

But what happens when spending has to go up in the years ahead? Just one item of higher expenditure already promised - raising health spending by $4 billion - would have wiped out last year's $3 billion primary surplus.

So where will the money come from?

Some analysts think the current framework of allowing the use of NIR gives the state access to enough funds for the medium term. NIR now makes up 14 per cent of total government expenditure.

Citigroup economist Kit Wei Zheng notes that it is unclear whether the Government has even drawn down on the full 50 per cent of returns available under the Constitution.

In any case, why should the cap be at 50 per cent? Why not allow a higher portion of the returns to be used?

Mr Kit points out that the NIR contribution is a draw on the flow of new returns on the reserves, not the capital stock itself. In other words, it's only part of the interest that is used, and the principal is untouched.

"Even if the NIR contribution were to be raised to, say 60 per cent, that still leaves 40 per cent of the existing returns to be re-invested to grow the capital stock further," he said.

He adds that "the calculation of the NIR contribution could be subject to some discretion, especially what the projected real rate of return is".

For example, in 2008, the Government changed the Constitution so that the NIR it can use includes returns from capital gains, interest and dividend income. It also takes a longer-term, inflation-adjusted perspective when calculating returns.

Tweaks in either of these will have an impact on the actual amount available to the Government.

But the NIR can at best provide a buffer. Deputy Prime Minister Tharman Shanmugaratnam has previously said that the NIR will go towards education, research and development, and major programmes to expand infrastructure. Although there are no legal limits on its use, that statement imposes a discipline on the Government to fund its operating expenditure out of tax revenues, not from NIR from past reserves.

As the tax base dwindles and social spending pressures increase, the Government will face mounting pressure to use more of its reserves before raising taxes.

Citizens may refuse to accept taxes while the state maintains vast reserves. This leads to the question of how much the state should save for tomorrow, rather than use what it has for the needs of today.

In other words, how much reserves is enough?

No one outside the highest echelons of government knows how much the state has in reserves. The reserves are managed by the Monetary Authority of Singapore (MAS), the Government of Singapore Investment Corporation (GIC) and Temasek Holdings.

MAS, or the central bank, manages Singapore's foreign reserves, which amounted to $304 billion as of April 30.

Temasek, which is wholly owned by the Government and set up in 1972 to hold and manage the Government's investments and assets, reported in July that its portfolio stood at $198 billion as at March 31.

Apart from its deposits with MAS and its stake in Temasek, the rest of the Government's assets are mainly managed by the GIC.

GIC has said in the past that it manages well over US$100 billion (S$125 billion) of Singapore's reserves, but foreign think-tanks such as the Sovereign Wealth Institute have estimated that the figure is closer to US$250 billion.

If you add the three pools of reserves up, you get about $800 billion. A very modest 2 per cent return on that comes up to $16 billion a year.

The NIR contribution last year was $7.91 billion. And even if we assume that the NIR contribution last year had hit the 50 per cent cap, activating the other 50 per cent of NIR would mean an additional $8 billion to the Government.

This is around 14 per cent of last year's total government expenditure and social transfers of $56.12 billion.

How much to save and set aside for the future without compromising the present is a delicate and important decision.

The Government for now understandably prefers to tilt the balance towards preserving more for the future, mindful that Singapore's ageing demographics portend a slower growing, and slower revenue-generating economy, at a time when Asian tigers leap ahead.

But it will have to contend with demands from those who want the state to lighten its coffers first, before tapping taxpayers.

After all, today's taxpayers will argue, the reserves were accumulated from the hard work of this and previous generations.

It is thus equitable to use at least the returns or the interest from those savings, to pay for the social and health expenses of the same generations who built up the reserves.

Some will go further and say it is justified to not only use the returns, but also to draw down a small portion of the capital.

The trouble with such arguments is that they may seem reasonable in isolation, but will spell big trouble down the road. If the country spends all its tax revenue, plus all the interest from past reserves, the reserves will never grow. If the country dips into the capital, the reserves will dwindle.

And when Singapore's economy slows - and it will, due to ageing demographics and limits to returns on productivity - the Budget will go into structural deficit, which means the country will spend more than it can collect (in taxes and interest from past savings) every year.

At some point, the inevitable result will be the state having to borrow to fund its operations. That's like a worker spending more than he earns every year, and borrowing to cover the shortfall.

Unless he gets a huge pay rise; a windfall; or his children take over the debt, the only sure outcome is more debt until he declares bankruptcy.

That prospect admittedly sounds remote, given Singapore's healthy annual surpluses and vast reserves today.

But as the troubles in today's euro zone countries and the United States tell us, the slide into fiscal perdition is all too easy - and hard to reverse.

aaronl@sph.com.sg

Welcome to the American Republic, Mr. Eastwood

By Gary Hart

Huffington Post 08/31/2012

Tempting as it is to send the iconic movie-maker Clint Eastwood a copy of Plato or even one of my books on the Republic, it would probably not make his day. But the past week, with its attempt to focus on economic issues, despite candidates telling their life stories or auditioning for national office in 2016, totally ignored the very nature of our nation. We are a republic, instituted as such by our Founders using the ancient republican ideal and classical model, and launched with the hope, and even expectation, that future generations down to the present day would live up to that ideal and its principles.

Partisan politics, so wrapped up in creating an antagonism between capitalism and government, misses the point. If we are to maintain ourselves as a republic, certain foundational principles of a republic must be upheld regardless of our economic structures. They are: popular sovereignty (power to the people, not Wall Street or Washington); resistance to corruption (placing special interests ahead of the common good); a sense of the common good (all those things that we own and hold in common); and most of all civic duty, citizen responsibility, and citizen participation.

Mr. Eastwood, being a dramatist, could have made quite a discussion with that chair concerning these qualities and whether we all, not just the president, live up to them. The convention arena would have been even more dumbfounded, doubtless to the point of silence. Any lingering suspicion regarding his sobriety or mental state would have fled. He would have had to revert to Dirty Harry to keep them from storming the stage. For they were there to belabor the president for not fixing the mess he inherited from He Who Shall Not Be Named and to rescue poor, misunderstood bankers from presidential, and public, scorn.

Leaving the quadrennial struggle for power aside for the moment, at risk in the 21st century isn't capitalism. It is republicanism. Though we elect our government, we do not have power because this republic is massively corrupt. Special interests dominate the executive and legislative process, even more so now thanks to the judicial branch. They do so by controlling campaign contributions. And any effort to defend the common good, our public resources and facilities, the systems of education, transportation, and even communications, that make us a national community, are met with Tea Party chants of "socialism".

We are left, then, with what makes a republic a republic -- civic virtue, citizen duty. A number of state officials are hellbent on making voting more difficult. A surprising number of people say that jury duty, which many seek to avoid, is one of the most interesting and rewarding experiences they have ever had. We celebrate our volunteer warriors as we send them off to war, whether necessary or not, but too often forget those who return wounded in body or spirit. But few citizens attend regular community meetings unless their immediate interest is involved. Oscar Wilde said socialism would never work because it involved "too many evenings." That's not socialism; that's republicanism.

I wish Mr. Eastwood's chair had held not a phantom Obama, but a live Jefferson.