SINGAPORE (Sept 24): “Instead of threatening to get up from my grave when things go wrong, I prefer to contribute while still alive but without getting in the way of the younger leaders.” — Former Singapore prime minister Goh Chok Tong, referencing a famous remark by his predecessor Lee Kuan Yew.
Here are five things you need to know this week:
1 Trade tensions across the Pacific escalated sharply as the US imposed its largest round of tariffs yet against China. On Sept 17, Trump announced 10% tariffs on another US$200 billion ($273 billion) worth of Chinese goods. He says that the tariffs will rise to 25% in 2019. Trump also threatened to hit another US$267 billion worth of Chinese goods with tariffs if China retaliates.
On Sept 18, China nevertheless retaliated with tariffs on US$60 billion worth of US goods, ranging from 5% to 10% and affecting over 5,000 products. The tariffs will take effect on Sept 24. However, China has also extended an olive branch, saying it is willing to negotiate for an end to the trade war.
The US has already imposed a 25% duty on US$50 billion of Chinese goods. In response, China imposed tariffs on US$50 billion worth of US exports, such as soybeans. China’s tariffs on US agricultural products are especially politically sensitive for the damage that will be wrought on Trump’s rural voting base.
“China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me. What China does not understand is that these people are great patriots and fully understand that,” Trump tweeted on Sept 18.
With mid-term elections on the horizon in the US, such tensions will likely continue, says Esty Dwek, senior investment strategist at Natixis Investment Managers. “Rhetoric and actions are unlikely to soften ahead of the mid-term elections, especially with the Democrats looking likely to win back the House. For now, markets do not seem worried about growth implication, but the longer these trade wars last, the more casualties we are likely to see,” Dwek says in a research note.
Fidelity International markets research analyst Ian Samson expects the tariffs to “add existing drags” on China’s growth. He estimates that the tariffs will shave 0.6% off Chinese’s GDP growth in 2019, assuming the tariffs rise to 25%. “This alone is not a significant cause for concern, but it will add to China’s ingrained slowdown following the clampdown on the shadow banking sector and the loss of infrastructure stimulus as a growth driver,” he says in a Sept 20 note.
In addition, Samson thinks that the tariffs might exacerbate China’s current account deficit. “This would put more pressure on the renminbi, which we don’t think is priced in. That said, Beijing ultimately maintains a lot of control over the currency through capital controls, so we don’t expect any disorderly price moves,” he says.
2 About one in four Singaporeans retrenched last year took up an offer of help from the government’s Taskforce for Responsible Retrenchment and Employment Facilitation, the Ministry of Manpower (MOM) announced on Sept 19. Of those assisted, about 70% found new jobs within six months.
According to MOM, some 9,120 Singaporeans were retrenched from 1,247 companies last year. There was a total of 14,720 retrenchments in 2017, down 23.2% from the previous year.
The taskforce was formed in 2016 to provide more timely information for those laid off to find new jobs. At the same time, the government has made retrenchment notifications mandatory. Since the start of 2017, companies with at least 10 employees must notify MOM if five or more employees are laid off within a six-month period.
As a result of these compulsory notifications, the taskforce has more information to help retrenched workers, says its chairman and CEO of Workforce Singapore Tan Choon Shian. In addition, WSG’s Adapt and Grow programmes can match employers and jobseekers.
“It was important that such individuals and employers kept open mindsets and were prepared to accept potential recruits or hiring opportunities that may not have seemed like obvious fits in the first instance,” Tan says.
The taskforce also announced that about 90% of companies had paid out benefits to retrenched employees with at least two years of service, similar to previous years. There were 74 cases of retrenchment-related disputes during the year, all of which were resolved through mediation, adjudication or engagement with employers.
3 South Korean president Moon Jae-in has vowed to work with North Korea towards denuclearisation and peace between both countries. Moon made the pledge at a press conference during his three-day summit in North Korea with its leader Kim Jong-un last week.
However, observers have criticised North Korea for failing to outline concrete action. During the summit, Kim offered to permanently disable the Yongbyon nuclear test site, but only if the US takes “corresponding measures”, which he did not elaborate on. Kim has also said he will visit South Korea in “the near future”.
On Sept 20, inter-Korean relations literally reached a new high as Moon and Kim trekked up the sacred Mount Baekdu and held hands at the peak. Koreans are fabled to have originated from the mountain, and North Korea claims that Kim’s father and grandfather were born there. Moon, an avid trekker, has long stated that he dreamt of scaling the mountain.
4 Sembcorp Industries has signed a deal with Facebook to provide locally sourced renewable energy over the next 20 years for the social media giant’s Singapore operations. This will include providing power for Facebook’s upcoming $1.4 billion data centre here. Expected to be operational by 2022, the data centre will cover a floor space of 170,000 sq m. Sembcorp Industries will provide the power by drawing from solar panels installed on close to 900 rooftops. These panels will be installed by 2020 and will have a total capacity of 50MWp.
Neil McGregor, CEO of Sembcorp Industries, says the deal illustrates how the company is positioning itself for the future. “As our world moves towards renewables and lower-carbon energy, there is an increasing demand for solutions that enable businesses to achieve growth while managing their impact on the environment. Sembcorp is actively working with companies in this and supporting their efforts towards this dual objective,” he says.
5 The Monetary Authority of Singapore has cautioned the public about two fraudulent websites seeking bitcoin investments. The sites, positivebathhour.com and gulfweedcrab.com, feature articles with fabricated comments attributed to MAS chairman and deputy prime minister (DPM) Tharman Shanmugaratnam.
The articles call on readers to create bitcoin accounts, and ask for their credit card or bank account details. One such article is headlined “Tharman Shanmugaratnam invests $1 billion for all Singapore residents. Use his method to get rich in just 7 days!”
“The statements attributed to DPM Tharman are completely false... DPM Tharman had in fact stated in a reply to a parliamentary question on Feb 5 that Singaporeans ‘could lose their shirts when they invest money in cryptocurrencies,’” MAS says in a Sept 18 press release.
