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BWeek: Is Singapore in Recession?
By Michael Shari
12/7/2001 5:39 pm Thu
[Kalaulah Singapura yang hebat itupun tergugat sama, apakah Malaysia
yang rezabnya sudah semakin surut itu akan terselamat? Tidakkah ramai
rakyat Malaysia turut bekerja dan bergantung hidup di sana? Dan penduduk
Johor kebanyakkannya adalah pengundi setia Umno yang asyik memekak telinga
sahaja bila pembangkang membaca kisah benar kepada mereka. Kini dengan
agensi pelaburan Johor sendiri rugi berjuta-juta serta saham ASJ yang
sudah tidak berharga kemana lagi rakyat Johor mahu mencari wang untuk
Rakyat Johor baru sahaja dilanda malapetaka tumpahan phenol di Selat
Melaka. Kini ikan terapung lagi akibat pencemaran yang luarbiasa yang
tentunya disebabkan oleh kilang yang ujud secara luarbiasa juga. Jika
kerajaan lengah menangani masalah ini akan semakin berkuranglah bendera
Umno di sini nampaknya.
Matawang Singapura kini telah jatuh keparas terendah 11 tahun sudah.
Kemerosotan pasaran IT dunia telah menyebabkan ekonomi Singapura secara
teknikalnya meleset pada suku pertengahan tahun ini. Sekarang ramai pakar
beranggapan ia akan memulas dengan lebih teruk lagi sebelum memulih semula.
Sakit itu akan terasa di negara sebelah tambak itu juga.... Ketika itu
barulah mereka tahu bendera Umno banyak sialnya.
By Michael Shari
Is Singapore in Recession?
Preliminary figures indicate yes, and even aggressive government measures and
promises of foreign investment may not be enough to turn the tide
From April to June, the economy contracted 10% compared to the first quarter,
which also saw negative growth, according to the Ministry of Trade & Industry.
While the Ministry is predicting the economy will still grow marginally in 2001,
independent economists aren't so bullish. They say growth may come later in the
year -- but, even so, the economy could still shrink by at least 0.5% this year,
according to David Cohen, regional director of economic forecasting at Standard
& Poor's MMS in Singapore.
Even that may be an optimistic scenario. For the economy to shrink in the 0.5% to
1.5% range this year would require 3% growth in the third quarter and 7% growth
in the fourth. Cohen says such a Herculean recovery would have to be led by
increased output in the electronics-manufacturing sector, which declined by 10.9%
in May from a year earlier, according to the Ministry. "And that's if they reopen
some of these factories that have closed down," Cohen points out.
PRIMING THE PUMP. The Singapore government's projections for the second
half of the year are more upbeat than Cohen's. The Ministry's announcement,
which described the second-quarter results as preliminary, said the economy would
grow in 0.5% to 1.5% this year. That could be achieved through pump-priming
measures, such as the acceleration of planned road and subway construction
projects, says Lim Jit Soon, head of research at Salomon Smith Barney in
Singapore. In 1998, when Singapore last fell into a technical recession marked by
two consecutive quarters of negative growth, the government helped employers
cut costs by reducing by 50% their required contribution to the Central Provident
Fund, the national pension plan.
The current recession is the direct result of the slowdown in Singapore's
export-oriented electronics sector. In addition to the decline in electronics
manufacturing, nonoil domestic exports dropped 8.5%. And Singapore has lost
thousands of jobs this year with the closure of several manufacturing plants, such
as Maxtor Corp. of San Jose, Calif., which announced in June that it would
eliminate 700 jobs. Singapore-based Creative Technology recently warned of a
10% earnings shortfall and said it would cut its work force by 10%.
The downturn is also a function of the consolidation wave that swept through the
contract-manufacturing industry last year. For example, in October, Solectron
Corp. of Milpitas, Calif., acquired Singapore-based NatSteel Electronics, which
had plants in such far-flung places as Singapore, Mexico, and Hungary.
To cut costs worldwide, Solectron and Singapore-based Flextronics are closing
down their Singapore plants and moving jobs to plants in other countries where
costs are lower. "We moved whatever could be done in Malaysia and China out of
Singapore," says Peter Tan, CEO of Flextronics' Singapore unit. For example, the
cell phones that last year Flextronics had assembled in Singapore are now
assembled in Shanghai, while the assembly of Hewlett-Packard printers and the
manufacturing of printed circuit boards has been moved to Malaysia.
NOT SOON ENOUGH. Help is on the way, but it may take until 2002 to kick in.
During the first quarter of 2001, foreign investors pledged more than $4 billion in
new semiconductor plants and biotech research labs in Singapore. That includes a
$3.6 billion wafer fabricating plant being built by United Microelectronics of Taiwan
and four new facilities Schering-Plough Corp. has announced it will build at a cost
of $450 million. Salomon's Lim predicts the government's Economic Development
Board will bring in more investments and that the government may achieve its
modest growth target in 2001.
Still, few economists are convinced more foreign investment or pump-priming will
make enough of a difference to stimulate seasonally adjusted growth by the end of
the year. "Their [the government's] estimate really requires a roaring rebound that is
nowhere in sight," says Cohen. "No one is heralding a new boom market."
Currency traders appear to agree, having sold the Singapore dollar down 0.4% on
July 11 to an 11-year low against the U.S. dollar.