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Peso returns to P52:$1 level on lingering US-China trade woes

THE PESO weakened further, returning to the P52-per-dollar level, as markets continued to react to lingering US-China trade tensions.

The local unit gave up 36.5 centavos, closing at P52.32 against the dollar on Wednesday from the P51.955 finish on Tuesday.

This was the worst performance of the local currency in 10 weeks or since the P52.35-per-dollar finish last May 29.

The peso started the trading day at P52.05 versus the greenback. Its weakest point during the day was at P52.36, while its strongest showing was at P52 per dollar.

Volume traded on Wednesday was higher at $1.724 billion from $1.320 billion on Tuesday.

“The peso weakened significantly [on Wednesday] after the known dovish Fed James Bullard said that the US Federal Reserve should not rush to cut policy rates, despite seeing more rate cuts for the year,” a trader said via e-mail.

Reuters reported that St. Louis Federal Reserve President James Bullard said the Fed does not need to “pile on” interest rate cut as US economy continues to grow and is still adjusting to the looser policy settings implemented this year.

Mr. Bullard also told the White House to not expect additional rate cuts every time trade policy threats send financial markets into tailspin.

“I don’t think it is realistic for the Fed to respond to each threat and counter threat in a tit-for-tat trade war,” Mr. Bullard said.

Meanwhile, another trader interviewed by phone said: “Positions are being taken out as the market continues to react to the developments that have happened since last week,” referring to the escalating trade tensions between the United States and China.

US President Donald J. Trump last week said he wants to impose an additional 10% tariff on $300-billion worth of Chinese goods effective Sept. 1.

In retaliation, China’s central bank, the People’s Bank of China, devalued its currency to 7 yuan against the dollar. Trade tensions went to another level when the US called China a “currency manipulator.”

For today, traders said the peso may weaken further ahead of the local central bank’s policy meeting.

“The local currency might continue to weaken as participants might position ahead of a possible BSP (Bangko Sentral ng Pilipinas) policy rate cut, following the strong rate cuts from its Asian peers such as the Bank of Thailand and the Reserve Bank of India,” the first trader said.

On Wednesday, Bank of Thailand eased its key policy rate by 25 basis points (bp) to 1.5%, while the Reserve Bank of India made a 35-bp cut to its policy rate to 5.4%.

Meanwhile, last Monday, BSP Governor Benjamin E. Diokno said he expects to cut rates by some 50 bps this year.

The first trader expects peso to move between P52.20 and P52.50 versus the dollar, while the second one gave a forecast range of P52-P52.50. — Mark T. Amoguis

Court dashes state push to reclaim Marcos wealth

THE COUNTRY’S anti-graft court has rejected for insufficient evidence a 30-year-old government suit seeking to recover P102 billion of alleged ill-gotten wealth of the late dictator Ferdinand E. Marcos, his family and their associates.

In a 67-page decision, the Sandiganbayan Second Division said the state “miserably” failed to prove that Mr. Marcos and his widow Imelda had illegally given out loans to several companies at the government’s expense.

The court’s decision came three decades after the case was first filed. The late President Corazon C. Aquino created the Presidential Commission on Good Government in the 1980s to go after billions of dollars worth of assets that the Marcoses allegedly stole from Philippine coffers.

During the late president’s 20-year rule, his wife, who served several terms as congresswoman after returning from exile in the US, amassed a large collection of art, jewelry, property and — most famously — at least 1,000 pairs of designer shoes.

The Marcoses collected paintings by Van Gogh, Michelangelo, Cezanne, Rembrandt and Rafael and Michelangelo, palatial homes in the US and the Philippines, gold necklaces and diamond tiaras before they were ousted in a popular uprising in 1986. At that time, investigators put their wealth at about $10 billion.

In its decision, the anti-graft court said the government had also failed to prove that the couple had pocketed income and revenue from the operations of several state-owned television networks. The state likewise failed to prove that the Marcoses had asked their cronies to hold and launder funds in their behalf.

“It saddens the court that it took more than 30 years before this case is submitted for decision,” the court said. “And yet, the prosecution failed to present sufficient evidence to sustain any of the causes of action against the remaining defendants.”

“The parties must rely on the strength of their own evidence, not upon the weakness of the defense offered by their opponent,” it said. — Vince Angelo C. Ferreras

Just a little more…

A cursory scan of the popular titles in a bookstore — The Little Book of Hygge: Danish Secrets to Happy Living, Lagom: The Swedish Art of Balanced Living, Wabi-Sabi: Japanese Wisdom for a Perfectly Imperfect Life, Ikigai: The Japanese Secret to a Long and Happy Life — and I can’t help but smirk.

Hygge (pronounced “hoo-gah”) originated in Denmark and Norway. It roughly translates as a general sense of well-being. Hygge is a feeling of calm, coziness, and warmth. The philosophy is all about “finding happiness and contentment by savoring cozy moments and drawing pleasure from the simple things in life.”

Imagine snuggling up in your sweaters in your room while the rain is pouring outside. Or switching off the lights and lighting a scented candle. And enjoying a cup of hot coffee or chocolate with family or a small group of friends. No need to spend much to be happy and content.

With origins in Sweden, lagom (pronounced “law-gom”) is “all about letting go of a self-indulgent, consumerist lifestyle and finding balance.” It subscribes to the principle of “just right,” not too little and not too much.

It means not having that second piece of cake if you are already satisfied, a balance between fullness and hunger. It means having only a few pairs of shoes, ready to be worn on more occasions than one, a balance between excess and lack. It means that while work is important, so are friendships and family, a balance between making a living and having a life.

Wabi-Sabi has its roots in Japanese Zen Buddhism. It praises “imperfect or irregular beauty.” It embraces “the natural passage of time.” It celebrates the “essentials and not trying to reach perfection.”

Imagine an old but well-used fountain pen, a watch that has seen better days but is still functioning, a grandmother who is proud of her hair and wrinkles and would not hide them.

Thanks to the hit show Tidying Up with Marie Kondo, these life philosophies have hitched on its popularity and generating worldwide interest. They are now being marketed as alternatives, complements, or yet another choice on how lives should be lived. While these have long been practiced by the natives, non-natives are now learning how to translate and transplant these ideas into their own cultures.

The KonMari Method recommends that things and objects that no longer spark joy are to be discarded. Wabi-Sabi espouses that we should value quality over quantity, as things should be utilized fully over its entire and complete life cycle. Lagom asks us to take the middle road, finding a balance between our needs and wants. And Hygge reminds us that happiness need not be expensive, as it can be found in the simple things in life.

Now imagine this. You die, and your stuff is left behind. Your family is left with the burden of sorting and cleaning out your “garbage.” Most methods suggest you discard while you’re still alive. For example, in The Gentle Art of Swedish Death Cleaning, you ought to start giving things you no longer need to family and friends, little by little, piece by piece, over a period of time. Every time you finish a book, you can donate it to the local library. A watch that you no longer wear, you might want to pass on to a relative. That suit that you have outgrown, a colleague may be too happy to have it.

All of these have a common thread. That is, living with less. The reason for the worldwide interest in these practical ideas is plain and simple. We are stuck with too much stuff. We buy too much, yet we remain unhappy.

Ikigai is yet one more concept. The question is simple. “What is our reason for being?” I think we know the answer. Just a little more.

And I have to suppress a snicker.

 

Real C. So lectures at De La Salle University. He is also an entrepreneur and a management consultant.

High Court lifts TRO on Mamasapano trial

THE COUNTRY’S anti-graft court may now proceed with the trial involving the 2015 deaths of 44 policemen in a botched counter-terrorism raid in the Mindanao region after the Supreme Court lifted an order stopping the proceedings.

This paves the way for the anti-graft court to act on a plea by Ombudsman Samuel R. Martires to remove former President Benigno S.C. Aquino III from the charge sheet.

Trial has not started and the accused have yet to enter their pleas.

“The Supreme Court has lifted the temporary restraining order on the Mamasapano trial before the Sandiganbayan,” court spokesman Brian Keith F. Hosaka said in a mobile-phone message yesterday.

The Ombudsman charged Mr. Aquino, his former police chief Alan Purisima and former police Special Action Force Director Getulio P. Napeñas, Jr. with graft and usurpation of authority in connection with the incident.

But Mr. Martires later said the ex-president could not have usurped power since he was the country’s chief executive.

The high court suspended the trial in February last year after the Volunteers Against Crime and Corruption and families of the slain cops asked it to overturn an order by former Ombudsman Conchita C. Morales to downgrade the charges to usurpation of authority from the 44 counts of reckless imprudence resulting in homicide.

Mr. Aquino allegedly bypassed the chain of command for the police operation l in Mamasapano town in Maguindanao province where 44 commandos died in a clash with Muslim rebels, a police investigative body said at that time. He also let his police chief, a close friend, take part in the planning and execution of the mission while he was suspended for a graft probe.

The president had said he was misled about details of the raid that targeted Mamasapano, an area inhabited by fighters from the Moro Islamic Liberation Front and Bangsamoro Islamic Freedom Fighters, a splinter group. Aside from the 44 police officers, 18 Muslim rebels also died in the clash.

The presidential palace declined to comment on the latest Supreme Court order, saying it does not interfere with the functions of a co-equal branch.

“We believe that the Office of the Ombudsman and the Sandiganbayan can tackle this matter with independence pursuant to their respective mandates,” presidential spokesman Salvador S. Panelo said in a statement. — Vann Marlo M. Villegas

Senate body agrees to defer village polls

A SENATE body on Wednesday agreed in principle to defer the May 2020 village and youth council elections, but has yet to decide on the new dates.

The committee on electoral reforms and people’s participation headed by Senator Imee R. Marcos tackled several bills seeking to move the elections to October 2022 for village officials and to May 2023 for youth councils.

Election Commissioner Antonio T. Kho, Jr. said they need a gap of at least a year from the national and local elections in May 2022 to prepare better.

“If this election does not push through, our request is that it should not be close to the 2020 elections,” he told lawmakers.

He also asked the committee to decide soon so they can start deferring the procurement of election materials originally meant for next year.

Senate Minority Leader Franklin M. Drilon proposed that elections be held instead in 2021 so incumbent village and youth council officials can complete their three-year term.

Augusto Lagman, who heads the National Citizens’ Movement for Free Elections, said Mr. Drilon’s proposal was a “very good compromise.” — Charmaine A. Tadalan

Agriculture needs help

Farmers and economists alike see the urgent need to improve the agriculture sector, mainly with the aim of ensuring food security, and one hopes that 66-year-old William Dollente Dar of Santa Maria, Ilocos Sur may just be the man to get the job done. He is no stranger to the Agriculture portfolio, having once served as Secretary of the Department of Agriculture during the Estrada Administration.

He is a horticulturist, a civil servant, and an academician — a product of the University of the Philippines in Los Baños. He had served in government and in local and international organizations that focus on agricultural research and implementing programs to improve agriculture even under harsh conditions in places like Africa and India. And it is during his stint abroad in particular that Dar truly proved his mettle as an administrator.

Dar is no stranger to development politics, and had shown that he was equipped with the skills and experience to bring together various stakeholders to achieve objectives. As head of International Crops Research Institute for the Semi-Arid Tropics from 1999 to 2014, he had helped improve investor confidence in the center, its stability, and its annual revenues, despite going against the grain, so to speak.

His efforts resulted in further support for the center from the likes the Bill and Melinda Gates Foundation, and the US, UK, and Indian governments. And despite concerns about the center forming a wide range of partnerships with non-corporate as well as corporate private sector, particularly in India, even an externally commissioned review could not dispute the evidence of stability in the center’s programs and confidence among partners and investors.

In my opinion, this is precisely the kind of person we need at Agriculture now. We need someone who can bring together various sectors and interests and to make them work on a common objective, a goal that benefits all. But the same person should also have the ability to harness the resources needed to implement programs and achieve objectives, and to back his assertions with data and research.

Going over his targets, however, I am worried that Secretary Dar may be setting himself up for a fall. In particular, he aims to double the income of smallholder farmers and fishermen in five years. This may be a tall order, given the number of factors that have an impact on farmer income that are actually beyond the scope and control of the Department of Agriculture. But I am willing to give Dar the benefit of doubt.

However, I totally agree with him that food security should be the urgent primary goal, and that the average annual agricultural sector growth of 1.1% should be significantly higher than average population growth of 1.8%. Otherwise, agriculture will always have to play catch up just to meet the food needs of a growing population. And this can result in periodic food shortages.

Media has reported on his requisites to agriculture development:

• Drafting a plan that include inputs from the private sector and other stakeholders; a systematic and long-term strategy in developing and promoting exports of raw and processed agricultural products to achieve economies of scale in on-farm production that will generate sustained quantity and quality of export products

• Using modern technology for all crops, including those with export potential in processed or value-added form like coffee, cacao, cassava, tropical fruits, and rubber, and then industrializing the value chain of every agricultural commodity

• Digitizing or computerizing farming and to make credit more affordable and accessible to farmers; “agri-preneurship” will modernize agriculture; farming and fisheries should be treated as business undertakings

• Making farms more productive, and improving income “by value adding, processing, manufacturing, and developing markets for both raw and processed agricultural products” through the combined efforts of the departments of Agriculture, Trade and Industry, and other government offices

• Infrastructure development; higher budget and more investments; and, legislative support for proposed laws related to agricultural and rural development

Dar noted the need to diversify crop production in the Philippines as about 80% of the country’s farmlands are devoted to only to three crops: rice, corn, and coconut. This I agree with considering that we produce rice to feed people, corn to feed people and animals, and coconut also to feed people and animals. Meantime, both corn and coconut are also used by industries. But of these three crops, only coconut products are being exported now.

I also support Dar’s call for consolidation of small parcels of farmland through schemes that include “block farming, trust farming, contract farming, and corporative farming that will make farming more efficient.” But this, I think, is easier said than done. This is a crucial issue. Without farm consolidation to achieve economies of scale, which may require circumventing agrarian reform, I just don’t see agriculture truly developing.

Not to take anything away from Dar, but his requisites are nothing new. Many other Agriculture secretaries before him had espoused similar ideas in the past. Mechanizing, modernizing, value-adding, and computerizing as well as the need for more investments have all been bandied about in the last 20 years. But none have had significant success in this regard. Even efforts to diversify away from rice, corn, and coconut have made little headway.

What can make Dar different, however, is his seeming ability to bring stakeholders together to work towards a common goal. This particular skill will serve him well in the next three years if he is to bring agriculture out of the doldrums, especially if he intends to pursue greater private sector or corporate participation and investment in large-scale farming, irrigation, and food production.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.

matort@yahoo.com

Filipinos OK with how 2019 polls turned out

FOUR OF FIVE Filipinos were satisfied with how the 2019 midterm elections — where allies of President Rodrigo R. Duterte dominated the vote that was marred by technical glitches — were conducted, according to a Social Weather Stations (SWS) poll.

The net satisfaction rating for the elections was +68 (very good), 5 points below +73 for the June 2016 presidential elections.

SWS said 79% of Filipinos through the Commission on Elections (Comelec) had done its job “independently without favoring any candidate or group.”

The polling firm said 86% and 88% of Filipinos believed the results for the senatorial and House of Representatives elections respectively.

SWS interviewed 1,200 adults from June 22 to 26 for the poll, which had an error margin of ±3 points.

“The survey results should put to rest the doubt cast by the vociferous and partisan minority upon the integrity of the midterm elections,” presidential spokesman Salvador S. Panelo said in a statement.

President Rodrigo R. Duterte, he added, is committed in asking the Comelec to have a “fraud-free technology provider in 2022 as part of his lasting electoral reform legacy.” — Arjay L. Balinbin

How government restricts energy development

In the first week of August this year, I saw seven energy-related stories in BusinessWorld Economy section alone:

1. “SolGen appeals Supreme Court ruling on power deal competitive selection” (Aug. 1).

2. “Solar Para sa Bayan franchise signed” (Aug. 2).

3. “MinDa added to energy investment council” (Aug. 2).

4. “PCC, ERC agree to cooperate to push competition in power sector” (Aug. 6).

5. “Energy efficiency firms call for new law’s IRR to reflect BoI perks” (Aug. 6).

6. “High court seeks Meralco, ERC comment on bill deposits case” (Aug. 7).

7. “DoE promises to seek other ways to make fuel prices more transparent” (Aug. 7).

The subjects within energy vary but there is one common trend in them — there are government agencies involved in all issues, which implies that electricity and petroleum concerns remain highly politicized until now.

Of those seven stories, the following stand out:

No. 2. What I call Solar para sa Politika. This is a very unique energy company in the Philippines: It is the only power generation company and distributor with a Congressional franchise; it is the only electricity distributor that covers so many provinces and encroaches on the geographical areas of other franchised electric cooperatives; it is the only renewable energy company opposed by almost all other renewable energy developers like Developers of Renewable Energy for AdvanceMent, Inc. (DREAM) because of certain privileges it gets that appear to be un-Constitutional; it is the only energy company whose franchise is questioned or outrightly opposed by other energy industry associations like Philippine Independent Power Producers Association and Philippine Rural Electric Cooperatives Association, major local business associations like Makati Business Club and Management Association of the Philippines, and foreign business groups like the American Chamber of Commerce; and, it is the only energy company whose owner is the son of an influential legislator. The ex-senator headed the Senate Finance Committee, the position alone could terrorize the Department of Energy (DoE) and Energy Regulatory Commission (ERC) and their budget if they join the chorus to oppose the franchise. Shameless corporation.

No. 5. Energy efficiency should be done even without legislation but this one sought legislation to target fiscal perks. The Department of Finance is the natural opposition because it wants to reduce perks and exemptions in exchange for lower corporate income tax (CIT). Another precedent, so other energy sub-sectors would also seek legislation to get their own share of perks and tax exemptions.

No. 7. The DoE knows that the “expensive oil is beautiful” policy under the TRAIN law (Tax Reform for Acceleration and Inclusion) is the biggest contributor to recent high oil prices. For diesel the excise tax, P2.50/liter increase in 2018, P2 this year, sub-total P4.50/liter increase plus VAT on excise tax. And another P1.50/liter increase in 2020. Yet the DoE instead turned its eyes on oil companies and imposed an implicit price control, prohibiting them from raising their prices unless they notify the DoE in advance and submit weekly reports about the components of their pricing. All players have trade secrets, like one has cheaper monthly land rent than others. These business secrets should not be divulged to others.

I also read in another newspaper that the leftist Makabayan bloc in Congress attacked Meralco for entertaining the competitive selection process (CSP) bid of its allied firms. Politicians as much as possible should stay away from the market dynamics of players once the government’s general rules have been issued, like the mandatory CSP instead of the regular bilateral power supply agreements with power generating companies.

So in the above stories, various government agencies aside from DoE and ERC — Supreme Court, Solicitor General, the Board of Investments, Philippine Competition Commission, Congress — are involved in various forms of regulations. Not mentioned there are other agencies that are also involved in power bureaucratization like the local government units, National Commission on Indigenous Peoples, Department of Agrarian Reform, Department of Agriculture.

The Philippines has among the lowest, poorest energy availability when compared with its many neighbors. See these numbers from the International Energy Agency (IEA), Key World Energy Statistics (KWES) 2018 report. (See Table).

The various energy regulators and law makers from the Executive, Legislative, and Judiciary should be aware and even be ashamed of this poor condition of Filipinos and Philippine-based businesses. Too much government intervention, regulations and prohibitions are bad for more energy development, more power supply addition, and cheaper electricity prices via more power supply addition and competition.

Private players should also avoid seeking new legislation for whatever bleeding-heart arguments they have and help depoliticize the energy sector. Many existing laws like the RE Act of 2008 (RA 9513) are already distortionary, let us not add any more.

 

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.

minimalgovernment@gmail.com

Iloilo-Guimaras service

A roll on-roll off vessel of Tri-Star Megalink Corporation arrived at the Lapuz Wharf in Iloilo City early morning on August 7 and started its first trip to Guimaras by 5:30 a.m. The Maritime Industry Authority (MARINA) called for the deployment of extra vessels to serve the Iloilo-Guimaras route as motorboats have been suspended while investigation is ongoing on the August 3 sea mishap.

Travel ban ordered vs 2 suspects in Sytin murder

AN OLONGAPO City court has issued a travel ban against two suspects in the killing of businessman Dominic L. Sytin. Presiding Judge Richard A. Paradeza of Olongapo Regional Trial Court (RTC) Branch 72 has granted the motion of the prosecution to issue a hold departure order against Oliver D. Fuentes and Alan Dennis L. Sytin, brother of the slain businessman and alleged mastermind of the killing. The Department of Justice indicted them last month along with alleged hitman Edgardo P. Luib for the shooting of Mr. Sytin outside the Lighthouse Hotel at the Subic Bay Freeport Zone on Nov. 28, 2018. The slain Mr. Sytin was the chief executive officer of United Auctioneers, Inc., chairman of Foton Philippines, and director and chairman of the board of the listed LMG Chemicals Corp. The RTC issued an arrest warrant against the two suspects last July 29. Mr. Luib, on the other hand, was arrested by the Philippine National Police last month. — Vann Marlo M. Villegas

Understand needs, co-create solutions

By Raju Mandhyan

HAVE YOUR efforts at driving positive change been challenged? Have people turned down your offers to grow and evolve even as all your intentions were to their benefits?

Yes, it is important as a leader to have visions and hopes for your people. Yes, AND it is important that a leader have a heart and be caring and compassionate as expressed in my last leader.

Yet all good intentions do not necessarily generate effective and relevant solutions. All good intentions do not get bought into just because they look, sound, and feel good. All solutions or innovations in product, processes, and professions must be targeted. They must have relevancy and focus towards that relevancy.

What is true in leading change is true in sales and marketing. What is true in sales and marketing is true in life and at work.

In his book, What the Customer Wants You to Know, Professor Ram Charan shares the story of Unifi Inc., a textile maker in Greensboro, North Carolina. This is a company that was in serious trouble in the past caused by low-priced goods from China and India flooding the US market. Prof. Charan writes about how the CEO placed their Chief Information Officer in charge of sales.

Instead of utilizing traditional methods to motivate and move sales, the CIO assembled his whole sales team and asked them not sell but to instead just focus on gathering maximum information about their customers. His sales team studied the business models of each of their former customers and their prospects to learn about their supply chain as well as the businesses of their customer’s customer. Day after day, the CIO pushed the sales team not sell but to learn, so they hit the road to learn everything, including the end users’ consumption habits of the textile they made. Unifi Inc. represented by the sales representatives, figured out how mothers, fathers and children perceived the fabrics and the goods made from fabrics they manufactured.

Prof. Charan claims the process was unusual and extremely frustrating for the seasoned business-to-business sales persons. They found it unproductive and tiresome. But after several weeks of information gathering and insight accumulation about the consumers and the end customers, business began to gradually pick up. The customers, dealers, and other converters of their raw material were amazed by the unusual approach of the Unifi sales team and they eagerly offered insights and tips for changing the game. The learning held relevance across industries, business models and economies engaged in all kinds of textile and fabric. Information and insights into the customer’s business made up the art of giving value for the customer. Eventually, business picked up for Unifi Inc. and they successfully got out of the red and thrived for many years after.

The story illustrates the fact that deeper focus and understanding of a client not just builds rapport, it builds long-term trust and aligns visions easily.

Regardless of what industry we might be in. Regardless of the kind of organizational setup we may have, and regardless of the purpose of our organization, every entity requires that it serves someone or something bigger than itself. When we sell to and serve something bigger than ourselves, that entity becomes our customer.

If we would like to drive change in our organizations and our communities, then a deeper, authentic intimacy of knowledge about them needs to become the crux of our focus. When we learn to view something with deeper and higher awareness, we learn for them and then serving and influencing them to a better place becomes a co-created solution.

 

Raju Mandhyan is an author, coach and speaker.

www.mandhyan.com

Singapore’s ordinary folk spend faster than the rich

By Andy Mukherjee

SINGAPORE is Asia’s Monte Carlo, a playground of the wealthy. The city-state has two casinos, an annual Formula One race, and the third-highest concentration of ultra-rich individuals after Monaco and Geneva. It’s home not just to the Crazy Rich Asians caricatured in the eponymous movie but also, increasingly, Brazilian and British billionaires.

Even the affluent in recently turbulent Hong Kong are beginning to find the rival financial center a safer option for their money (if not yet their persons). So it’s all the more surprising that in the past five years, most of the spending impulse in Singapore has come from those at the bottom of the economic pyramid, while the condo-dwelling bankers and the landed elite have been relatively thrifty.

Consumption patterns are being influenced by crosscurrents of technology, changing tastes, government policy, anemic global growth, and low-for-long interest rates. The spending shifts in Singapore will not only shape the local retail landscape, they will inform the debate on issues ranging from the unrest in Hong Kong to a universal basic income as a tool to counter inequality.

Between 2013 and 2018, people living in one- and two-room public housing increased their monthly spending by 3.7% on average, while families in private apartments saw expenditure fall by 0.1%. Households living in landed property, who spent nearly 5% more on average every year between 2008 and 2013, tightened the purse strings to just 0.2%. On a per person basis, the trend comes up the same. So does analyzing spending by income groups, rather than types of dwelling.

The findings were released last week as part of the statistics department’s household expenditure survey, a detailed study conducted every five years. But why are Singapore’s rich in hibernation while the masses are boldly spending their incomes?

The government’s study covers a period in which internet connectivity doubled to 45% among households living in the smallest units offered by the public housing agency. No wonder that overall spending on a number of things — from digital cameras to car ownership — declined. Spending on clothing and footwear as well as recreation has been stagnant for 10 years. Phone cameras got better and made digital cameras redundant; in a city where the mandatory certificate of entitlement to own a car is often costlier than the vehicle itself, ride-hailing apps came as a blessing. Cheaper online substitutes emerged for shopping and entertainment. Ever since Netflix and Amazon Prime video arrived, telco StarHub Ltd.’s pay-TV subscriber numbers have fallen from close to 550,000 is Q1 of 2012, to less than 400,000 in Q1 2019.

Technology democratizing consumption fits a global pattern. As my colleague Shuli Ren has written, in China, the wallets that are increasingly coveted belong to working-class spenders in cities ranked as Tier 3 and lower. These consumers prefer to shop on sites like Pinduoduo, where everything’s available at a discount. In Singapore, retail is also an important category in the property market. Generation Z — those born after 2000 — won’t be mall rats and that has implications for real-estate investment trusts.

The impact of slow global growth and low interest rates is visible in the consumption gap. Back in 2008, each member of the richest 20% of households spent S$2,171 ($1,577); her counterpart in the poorest 20% of families spent S$574. The figures for 2018 are S$2,945 and S$942, respectively. The gap has narrowed to 3-to-1 from almost 4-to-1.

Annual income growth, including investment returns, slowed to 2.4% for all families between 2013 and 2018, from 5.3% in the previous survey. But it seems the well-heeled are getting extra gratification by spending little more than before, while the less privileged need to open their wallets a lot wider. That’s partly because 6.8% of the top earners’ consumption is online, compared with just 2.6% for the bottom earners. Negative global interest rates may be bad news for the rentier classes, but the very low inflation or deflation that makes them inevitable is helping the rich more than the masses.

Singapore, however, also shows how to counter this “secular stagnation,” a persistent global downturn that doesn’t respond to easy money. In the 2011 elections, voters expressed frustration over packed subway trains and breakdowns and the government spent billions of dollars to improve the network and subsidize operating losses. Reliability has improved seven-fold since 2015 and residents now spend 2.6 percentage points less of their monthly budget on transportation than a decade ago. The savings seem to have gone into an increase in housing costs, but that largely pinches expatriates, who rent. Since most Singaporeans own their homes, a jump in the imputed rental of owner-occupied homes improves their housing wealth. That’s further boosted by new subway lines coming near where they live.

Hong Kong, by contrast, is too wedded to free markets to create state-led housing and pension wealth for its masses. The anger seen in recent anti-government protests, ostensibly over an extradition bill, is fed by angst over not having enough voice to force the local administration to tackle such pocketbook issues.

The other message from Singapore could resonate more globally — how to tackle rising income inequality, a common problem confronting developed countries. Giving everyone $1,000-a-month checks, as US Democratic presidential hopeful Andrew Yang advocates, may not be the best way. Redirecting the taxes paid by the rich to the poor in the form of wage supplements, targeted subsidies, vouchers, and some free-to-spend cash can produce better outcomes.

Singapore gave each inhabitant of a one- or two-room apartment S$10,347 last year in such fiscal transfers. Income inequality is lower than before the 2008 crisis, which shows how fiscal policy can fight secular stagnation even though monetary policy is all but powerless. The moneyed folk will still make a splash, like when the vacuum-cleaner billionaire James Dyson snapped up a S$73.8 million penthouse, the costliest in Singapore’s history. But it’s the quiet humming of the cash registers in hawker centers that’s more telling now.

 

BLOOMBERG OPINION