SINGAPORE (Dec 31): At the rate we are going, the year ahead is promising to be even more challenging than these last 364 days. There is doubt over the strength of the world’s top two economies. Major markets are in turmoil, after a decade-long bull run, and amid concerns that the US economy may not be able to handle the continued pace of interest rate hikes.
We have experienced how, in this age of the internet, there is actually no such thing as data security: Just about everyone has had their personal data either stolen or exposed to hackers, criminal or otherwise. The effects of climate change are increasingly devastating — on lives and the economy. And politicians and policymakers are also being confronted, yet again, with popular discontent, as the rapid economic growth of the last decade has caused a widening wealth divide.
In the following pages, we have recapped some of these issues that we think will carry forward into 2019, and laid out why they would matter. The issues span business and society, as the interests of both spheres converge.
To be sure, 2018 had started out positively enough. After months of unnerving nuclear missile launches, North Korean despot Kim Jong Un, in his New Year’s Day message, initiated peace talks with South Korea. He said the North would be sending a national team to compete in the Winter Olympics to be held in PyeongChang in the South. Hours after Kim’s speech, South Korean President Moon Jae-in’s office responded by saying Seoul was always ready to engage in dialogue with Pyongyang.
Kim also reminded the international community, however, that he had the nuclear launch button “always on my table”, and said the whole of the US was within range of the North’s nuclear missiles.
Nevertheless, on Jan 9, delegations from both North and South Korea met in the so-called truce village of Panmunjeom-Paju in the demilitarised zone on their borders. In June, in another landmark moment, Kim met with US President Donald Trump in Singapore. The meeting produced an agreement between both sides that critics said gave Kim the upper hand and was otherwise short on substance. The document noted a commitment from Trump “to provide security guarantees” to North Korea, while Kim “reaffirmed his firm and unwavering commitment to complete denuclearisation of the Korean Peninsula”.
The latter has yet to materialise but, in any case, the Trump administration soon had its hands full with a tit-for-tat trade dispute with China. As The Edge Singapore has reported, the like-for-like tariffs have repercussions across the global supply chain and small, trade-dependent economies such as Singapore could be affected more than others.
Locally, the landscape was just as eventful, to say the least. Throughout the year, we have covered the corporate shenanigans as they were uncovered. Several companies listed on the stock exchange have had their shares suspended, amid allegations of fraud and mismanagement, leaving minority shareholders severely out of pocket and ready to revolt. We have called for corporate governance and regulatory reform, as well as accountability from the companies’ independent directors and auditors, who have, surely, a significant part to play in ensuring corporate malfeasance does not get the better of investors. Encouragingly, changes are in the making; and the market would be watching how they play out in 2019.
In any case, as we have highlighted in our reports earlier in the year, investment behaviour today is becoming less in the manner of Gordon Gekko in the Wall Street movies; smart money is increasingly finding its way to investments that satisfy certain metrics related to environmental and social responsibility. And those investment drivers are in turn compelling corporations to behave responsibly towards the environment and the community, ensuring that, for example, the supply chain is free from illegal or unsavoury labour practices.
Along with corporate conscience, wider society is showing increasing realisation of the growing chasm between the haves and the have-nots. In some places, that has manifested in the rise of right wing, nationalist movements: France was rocked by destructive protests by the Yellow Vests, triggered by a government proposal to raise fuel taxes.
In Singapore, there has been heated debate over whether there should be a minimum, or “living”, wage for the lowest-earning workers. The conversation extends beyond that, of course, to the growing income inequality in the city state. And, as we have also reported, there is a need to review the various public policies that have engendered a form of social stratification, which is proving to be the real divisive force in the country, rather than race or religion.
According to the World Economic Forum, rising income and wealth inequality, along with even climate change, has been the consequence of the world’s single-minded focus on generating growth. The social contract among the various stakeholders in an economy has been broken, and “business is the winner who takes it all”, says WEF founder Klaus Schwab. And, should this continue, economic growth will not be sustainable, he warns.
To that end, WEF has proposed that countries’ economic performance be measured according to an Inclusive Development Index, the alternative to GDP. In addition to economic growth and development, the index takes into account inclusion, intergenerational equity and sustainability. The idea, essentially, is to balance profit and motive — that it is not growth at all costs.
That is the bright side. “Inclusiveness” was the buzzword in 2018. What will it be in 2019?