Singapore in the eye of a perfect economic storm

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By: Frank Doe

We are now caught in the eye of the perfect storm so to speak, it’s not over yet and things are set to get worse. The news of the grim spectre of negative employment growth (especially for the local PMETs) has yet to sink in.

We now see Indonesia’s perfect timing of the rollout of their tax amnesty plans to lure cash back from Singapore. This has far exceeded expectations and the take-up rate far surpassing analysts’ estimates as reported in the financial news last Saturday.

This will likely make a considerable dent in Singapore’s wealth management industry seen in the exodus of funds hitherto parked here by the ultra rich Indonesians to evade taxes back home.

This had always been a contentious issue with the Indonesian government and at one time leading Indonesia to stop selling sand to Singapore at the height of the MBS mega project.

This landmark tax-amnesty programme is the brainchild of Indonesia’s new Finance Minister, Dr. Mulyani Indrawati, in the Jokowi administration and is seen to be the silver bullet to help raise the hundreds of billions of dollars Indonesia needs to beef up a flagging state budget.

Dr. Mulyani Indrawati held top-notch position in the World Bank, exactly the type of technocrat that Jokowi wanted back in Indonesia.

In essence, the Indonesian tax-amnesty programme provides a reprieve to wealthy Indonesians who have been remiss in their tax affairs to take advantage of this golden opportunity to disclose and optionally repatriate their undisclosed assets overseas and pay only a modest clearance levy on assets declared and brought home.

Three brutal news hit Singapore on this black Monday (3 Oct):

  1. the gloomy days for strata office market,
  2. the Perisai bond default contagion eating into Ezra’s cash pile, and
  3. private home sales down 12th consecutive quarter as reported by URA.

The recent grim headlines suggest that Singaporeans must be worried – be damn worried – for the generations going forward.

Singapore has lived its “Golden Era” under the leadership of Lee Kuan Yew and Goh Chok Tong. We are now descending into the “dark ages” under Lee Hsien Loong.