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Briefs: Lawrence Wong sworn in as S’pore’s fourth PM; US core CPI cools; China considers buying unsold homes

The Edge Singapore
The Edge Singapore • 8 min read
Briefs: Lawrence Wong sworn in as S’pore’s fourth PM; US core CPI cools; China considers buying unsold homes
Lawrence Wong (second from left) swearing in as Singapore’s fourth Prime Minister on May 15. To his left are President Tharman Shanmugaratnam and Chief Justice Sundaresh Menon. Photo: MCI
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“Some people in the US have lost their sanity in order to safeguard their unilateral hegemony.” — China’s Foreign Minister Wang Yi in reaction to the latest round of tariffs imposed by the US

Lawrence Wong sworn in as Singapore’s fourth Prime Minister

Former Deputy Prime Minister (DPM) and Finance Minister Lawrence Wong has been sworn in as Singapore’s fourth Prime Minister (PM). The inauguration ceremony was held at the Istana on May 15.

At the ceremony, President Tharman Shanmugaratnam said he has “full confidence” in Wong’s ability to lead Singapore as the nation ventures into uncharted waters internationally, and to rally Singaporeans from all walks of life.

“He will be his own person, with his own approach to building consensus and finding the best way forward for the country. And he will no doubt do so to his own rhythm and beat,” says President Tharman.

PM Wong was selected as the leader of the People’s Action Party (PAP) fourth-generation team on April 14, 2022. He was promoted to DPM on June 6, 2022, and appointed as the PAP’s deputy secretary-general, a role newly created in November 2022.

See also: Hong Kong and Singapore top world's most expensive city list for expats in 2024

With the swearing-in, PM Wong replaces former PM Lee Hsien Loong, who assumed the title of Senior Minister after 20 years in the top job. PM Wong warns that the new external environment will not be easy and calls for support. “We must brace ourselves to these new realities and adapt to a messier, riskier and more violent world.”

“With our tripartite partners, we will continue to build a vibrant economy and create good jobs for all,” says PM Wong. “We will find new ways to be more productive and innovative and achieve a better balance where work is purposeful, and life is meaningful.”

A day earlier, PM Wong said to the media: “I will be open, consultative, I will listen. But in the end, I will not shirk from doing the right thing and the important decisions that are necessary to take Singapore forward. I do not have to write my legacy today. Hopefully, at the end of my time and my tenure, I will leave people to write [about] my legacy and what kind of a PM I am. But for now, entering this role and taking on this responsibility, I will only endeavour to do my best and to serve, with all my heart, Singapore and Singaporeans.”

See also: Singapore’s ship-fuel sales surge as global trade flows jolted

Over this last week, the PAP made minor changes to its Cabinet. Minister for Trade and Industry Gan Kim Yong was appointed DPM on May 13. He remains as Trade and Industry Minister.

PM Wong also announced that Gan will replace him as chairman of the Monetary Authority of Singapore’s (MAS) board of directors.

Gan, who has served as MAS’s deputy chairman since July 8, 2023, will serve a two-year term as chairman until May 31, 2026.

Current DPM Heng Swee Keat, who was the earlier candidate to take over from Lee, will remain in his role.

PM Wong began his public service career as an economist in the Ministry for Trade and Industry in August 1997, and was then posted to the Ministry of Finance in January 2002 and the Ministry of Health in July 2004. From May 2005 to August 2008, he was Lee’s principal private secretary.

PM Wong’s political career began when he was fielded and won in West Coast GRC during the 2011 General Election (GE). He then contested in Marsiling-Yew Tee GRC in the 2015 GE, and has been a Member of Parliament for the constituency since. Throughout his political career, PM Wong has held several positions in various ministries.

As Minister for National Development, a role he held between October 2015 and July 2020, he and then-Health Minister Gan Kim Yong were appointed co-chairs of a multi-ministerial committee to manage the pandemic in Singapore. — Nicole Lim and Jovi Ho

To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section

US core CPI cools for first time in six months in relief for Fed

A measure of underlying US inflation cooled in April for the first time in six months, a small step in the right direction for Federal Reserve officials looking to start cutting interest rates this year.

The so-called core consumer price index (core CPI), which excludes food and energy costs, increased 0.3% from March, according to government data out on May 15. From a year ago, it advanced 3.6%.

Economists see the core gauge as a better indicator of underlying inflation than the overall CPI. That measure climbed 0.3% from the prior month and 3.4% from a year ago, Bureau of Labor Statistics (BLS) figures showed. Shelter and gasoline accounted for over 70% of the increase, the BLS said in the report.

While the figures may offer the Fed some hope that inflation is resuming its downward trend, officials will want to see additional readings to gain the confidence they need to start thinking about cutting interest rates.

Chair Jerome Powell said on May 14 the central bank will “need to be patient and let restrictive policy do its work”, and some policymakers do not expect to cut rates at all this year.

“It does open the door to a potential rate cut later in the year,” said Kathy Jones, Charles Schwab’s chief fixed-income strategist. “It will take a few more readings indicating that inflation is coming down for the Fed to act.”

The central bank is trying to rein in price pressures by weakening demand across the economy. Separate data out on May 15 showed retail sales stagnated in April, indicating high borrowing costs and mounting debt are encouraging greater prudence among consumers. — Bloomberg

China considers government buying of unsold homes to save property market

China is considering a proposal to have local governments across the country buy millions of unsold homes, people familiar with the matter said, in what would be one of its most ambitious attempts yet to salvage the beleaguered property market.

The State Council is seeking feedback from several provinces and government entities on the preliminary plan, said the people, asking not to be identified discussing a private matter.

While China has already experimented with several pilot programmes to clear excess housing inventory with the help of state funding, the latest plan would be much larger in scale.

Local state-owned enterprises would be asked to help purchase unsold homes from distressed developers at steep discounts using loans provided by state banks, according to two of the people. Many of the properties would then be converted into affordable housing.

Officials are still debating details of the plan and its feasibility, the people said, adding that it could take months to be finalised if China’s leaders decide to go ahead. The housing ministry did not respond to a request for comment.

If authorities do proceed, it would mark a new phase in the government’s closely watched campaign to address the biggest drag on the world’s second-largest economy.

China’s home sales plummeted about 47% in the first fourth months and unsold housing inventory is hovering at an eightyear high, exacerbating a meltdown that threatens to put about five million people at risk of unemployment or reduced incomes.

The plan can “inject liquidity to developers directly and improve their financial situation, as well as immediately digesting excess inventory”, said Raymond Cheng, head of China property research at CGS International Securities HK. “This is an all-win situation. Of course, it needs a lot of funds — at least RMB1 trillion [$186 billion] to make the impact more meaningful.”

Shujin Chen, head of China financial and property research at Jefferies Financial Group, estimated at least RMB2 trillion of investments would be needed.

Investors have been awaiting details of the government’s next moves after the ruling Communist Party on April 30 vowed to explore new approaches to ease the real estate crisis.

The Politburo, composed of China’s 24 most-senior leaders, said the country was studying ways to “digest” the existing stockpile of homes. While Beijing has experimented in the past with state buying of unsold apartments, most smaller-scale initiatives have met with little success.

In early 2023, the People’s Bank of China made RMB100 billion available to some financial institutions through a specialised lending facility. The money was meant to help eight cities on a trial basis buy unsold properties for use in local subsidised rental programmes.

The Economic Observer newspaper reported in January this year that cities including Qingdao and Fuzhou had started using those funds to buy apartments. Still, only RMB2 billion was extended under the programme as of March, the central bank’s latest quarterly data showed, implying caution among banks and local authorities.

Since the Politburo meeting last month, several major cities including Hangzhou, the homebase to Alibaba Group Holding, scrapped all their remaining curbs on residential purchases to lift transactions.

Meanwhile, more than 50 Chinese cities rolled out “trade-in” programmes that offer residents incentives for selling their old homes and upgrading to new properties as part of efforts to boost housing demand.

Among them, 11 local government or city-backed entities are conducting trials of buying housing inventory, according to a note from Tianfeng Securities Co this week. — Bloomberg

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