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Sports Editor Mathew Pereira
Forum Editor Yap Koon Hong

Obstacle course to the Sports Hub

T
HE Sports Hub is to be the newest
jewel in Singapore’s stock of world-
class infrastructure. As is the case
with the Esplanade performing arts
venue, it is an emblem of the nation’s
steady transition to creativity and qual-
ity leisure. The stadium complex
planned for Kallang is still what the
advance publicity says it is. The design
features which include a retractable
roof undoubtedly will blow the people
away when the facility with its related
amenities opens for business.
This is the question on every lip:
When? The project is behind schedule
before even the first sod is turned. Dr
Vivian Balakrishnan, the minister
whose brief includes sport, said budg-
et volatility on account of building and
interest costs made it unwise to rush
it. On this reckoning, delay could be
indefinite. It is projected that the
replacement for the National Stadium
will not be ready for the 2013 South-
east Asian Games which Singapore is
scheduled to host. Singaporeans are
not accustomed to being smirked at
over planning and organisation, their
forte. Although the Games are not a
marque event, passing them up be-
cause the main venue is nowhere near
ready will be a letdown.
Questions will be raised about the
“public-private partnership”, the mod-
el for the Hub’s construction and man-
agement. Private business will bear
the building cost, after which the state
will lease the property for an annual
fee over a specified period, said to be
25 years. The consortium will operate
the facility and be responsible for the
sports programming. If it is unable to
line up financing because of the linger-
ing effects of the global banking deba-
cle, it is bad luck. Nobody is to blame.
Negotiations should continue, possibly
with state help, to secure funding at an
acceptable price. It would be a differ-
ent matter if the consortium is having
to review plans not only because of
cost overruns, but perhaps also over
the projections based on the business
model, which is to operate the Hub as
both facilities manager and originator
of events ideas to keep the complex
well used and profitable. Little is
known about the difficulties encoun-
tered. The Singapore public ought to
be updated as it has a proprietary inter-
est in that tax money will be spent.
We are confident the Hub will turn
out nicely: the state and the risk-tak-
ers gain, while the paying public has a
ball year round. But a government
review of the public-private model for
certain projects is wise. Is it still feasi-
ble in the light of private capital under-
going structural change after the 2008
jolt? Shortages of steel, cement and
other materials are variables. Pub-
lic-private has an appeal in countries
low on funds. This is not the case here.

JOBS CREDIT SCHEME

Extend and sharpen

this precision weapon
BY TAN KHEE GIAP ing nations in the world. When high un-
FOR THE STRAITS TIMES employment is caused not by the lack of
productive efficiency but by exogenous
shocks such as a drop in external de-
further deterioration in their business en-
vironment and might succumb to re-
trenchment or factory closures. For such
firms, the JCS is a precision weapon – it

T
HE Jobs Credit scheme (JCS),
introduced in the Budget this
year to encourage companies
to retain headcount during the
recession, has attracted some
controversy. Some have even questioned
whether it is justified or effective.
It is useful here to review the primary
rationale for the scheme. By assessing the
direct and indirect policy outcomes of the
scheme, we can arrive at a better conclu-
sion as to whether it should be renewed
or modified going forward.
I propose that the scheme be extended
by six months, perhaps with a possible ex-
tension of another six. To begin with, the
scheme should best be viewed as an inno-
vative effort by the Government to help
absorb, in part, the variable costs of com-
panies through wage subsidies. This was
done to ease the pain of potentially large-
mand, it behoves the Government to miti-
gate, if not overcome, such problems.
After years of fiscal prudence, the Gov-
ernment possesses ample fiscal resources
to cushion the pain of unemployment
amid external shock. The JCS is also sore-
ly needed and timely for small and medi-
um-sized enterprises (SMEs), which con-
tribute 54 per cent of the total employ-
ment in Singapore.
It is one thing to offer up highly articu-
late theories about the need for the unfet-
tered functioning of free markets. It is
quite another for free-market fundamen-
talists to overlook the pains, stresses and
social repercussions of high unemploy-
A modified Jobs
Credit scheme should
helps save jobs. That said, however, the
weapon can do with even more precision.
Looking ahead, a modified JCS should
discriminate between big corporations
and SMEs in terms of the percentage of S
wage subsidies. Wage cost as a propor-
tion of total costs for big corporations
and SMEs varies significantly – about 15 S
and 40 per cent respectively. Such a tar-
geted approach will not be administrative-
ly cumbersome since there are working
definitions for their determination.
According to studies done by the Nan-
yang Technological University’s Asia Re-
search Centre, concerted and consistent
expansionary budgets by various govern-
ments have resulted in earlier-than-ex-
pected signs of global economic recovery.
That said, it would take at least three
years before the global unemployment
rate eases back to natural or “normal”
S

scale unemployment and the associated

rates. Globally, another round of econom-
long-term adverse social repercussions discriminate between big
S

for Singapore’s lower-income groups. ic restructuring is occurring, with facto-

The scheme is not meant to stimulate
private consumption. The consumption
multiplier effect for the targeted lower-in-
come groups – the increase in gross do-
mestic product caused by higher spend-
ing – is hardly significant. Moreover, the
global financial and economic crisis that
buffeted the Singapore economy late last
year was due to a decline in external de-
mand for manufactured goods from ma-
jor developed economies. It will be futile
for an open economy like Singapore to
prop up domestic consumption.
Theoretical economists would argue
that persistent government policies to
subsidise prices would generally distort
the free market’s resource allocation
mechanism and erode the long-term com-
petitiveness of an economy. This argu-
ment is correct, but only to an extent.
The JCS, however, is not a long-term
policy. Rather, it is a one-off, short-term
scheme, the extension of which is subject
to review. As such, there should be mini-
mal concerns about distortion and an ero-
sion of competitiveness.
Singapore is one of the most open trad-
corporations and SMEs in
terms of the percentage of
wage subsidies.
ment in a non-welfare-driven economy
like Singapore. Lower-income groups
have very little financial buffer when
their sole breadwinners lose their jobs.
The JCS should also not be interpreted
as a policy designed to narrow income dis-
parities, nor as a de facto bonus or pay
rise for low-income employees. They
may well emerge as indirect policy out-
comes, but they were not intended as
such.
The JCS comprises a 12 per cent wage
subsidy to resident employees earning
monthly salaries of $2,500 and below. It
is funded through the country’s reserves.
It is superior to an across-the-board Cen-
tral Provident Fund cut, which would
have benefited employers at the expense
of employees, reduced job losses at the
margin, and altered the wage disparity be-
tween local and foreign employees.
Admittedly, some companies predict a
ries being relocated from expensive to
cheaper production bases. A return to ro-
bust growth will take time.
Amid such shifts, Singapore has not
been spared. Potential economic growth
of 5.5 per cent for Singapore would return
only by 2011. Unemployment would re-
main higher than the natural rate of 2 per
cent for the next three years. Some pro-
duction activities which Singapore lost
are lost forever.
In summary, the Government should
take a macro view on a possible extension
of JCS by reviewing Singapore’s econom-
ic performance going forward. At the mi-
cro level, it should also be mindful of the
plight of low-income groups, and how po-
tential unemployment could affect them.
Continuation of the JCS for another
six months – perhaps for slightly longer
– would be welcome by all. It will also
make another round of off-budgetary
stimulus quite unnecessary.
The writer is an associate professor of banking
and finance and co-director at Asia Research
Centre, Nanyang Technological University.
See Insight Pages A38 and A39

Also, soon after independence in the

The re-emergence of an integrated Asia
BY PRADUMNA B. RANA gence of the Chola empire in South India
FOR THE STRAITS TIMES and the Sung dynasty in China in the 10th
and 11th centuries as large, unified and
prosperous regional powers, provided an
Gunder Frank noted that, from 1400 to
1800, India’s trade with South-east Asia
was conducted using the sea route from
the ports in Bengal and on the Malabar
er goods for sale to merchants in Tibet.
These merchants then sold the goods in
China. Payment was in Chinese products
such as tea and gold.
late 1940s and for more than four dec-
ades, South Asia adopted an inward-look-
ing Soviet-type development strategy
and continued its isolation from the rest
of Asia and the world.
The world’s focus was, therefore, on
East Asia and the miracle economies in
the region.
Since the 1990s, Asia’s internal inte-

M
UCH has been written
about Asia’s rise and the
economic integration of
China and India with the
rest of the continent.
However, these developments are not
without historical precedent and it would
be more appropriate to refer to Asia’s
“re-emergence” and “re-integration”.
For the first 18 centuries after the birth
of Christ, Asia – mainly China and India
– dominated the world economy. During
this period, Asia was also a well-integrat-
ed region of the world.
The first millennium was a period of
rapid growth for India and China. Trade
and commercial ties between these two
countries also increased rapidly.
The opening of the Strait of Malacca in
the fifth century, together with the emer-
additional fillip to regional trade and com-
merce.
Together with land and sea-borne com-
merce, traders, missionaries, priests, ad-
venturers and fortune-seekers moved
from South Asia to South-east Asia. The
Sanskrit language, Hinduism and Bud-
dhism were like old wine lacing East
Asia’s culture.
According to economics professors Ro-
nald Findlay of Columbia University and
Kevin O’Rourke of Trinity College Dub-
lin, various sub-regions of Asia had exten-
sive trade and cultural links with one an-
other and with the Islamic world – now
known as the Middle East – by around
1,000 AD. They had little contact, howev-
er, with East and West Europe.
The late economic historian Andre
and Coromandel coasts.
While India and the Central Asian
countries were linked by the Silk Road,
Frank noted that there were no direct
trade links between India and China.
India exchanged cotton textiles for
silk, porcelain and other ceramics with
China using the same trade routes that it
used for its trade with South-east Asia
through the ports along the Malabar and
Coromandel coasts, and in Bengal.
From the Coromandel and Malabar
ports, goods were transported to Burma
and Thailand and then taken over land to
China. From Bengal, goods were shipped
to China via Malacca.
India also traded with China through
Nepal. Bengal and Assam exported tex-
tiles, indigo, spices, sugar, hides and oth-
Some economic historians have coined
the terms “Farther India” or “Greater In-
dia” to describe India’s influence in
South-east Asia in those days.
“Farther India” comprised Indonesia,
insular South-east Asia (except the Philip-
pines) and the Indochinese and Malay Pe-
ninsula.
Soon after the Industrial Revolution of
the late 18th century, the world’s centre
of gravity shifted to Europe, and eventual-
ly to America in the 20th century.
During the 19th century and the first
half of the 20th, colonial masters divided
Asia into spheres of influence, took con-
trol of trade and customs, and restricted
access to inland waterways.
They fragmented Asia and damaged in-
tra-Asian trading systems.
gration has been intensifying. Asia is also
starting to be “re-centred” as trade and
investment between South Asia and East
Asia surge. China recently became India’s
largest trading partner. Increased linkage
between South and East Asia has led to
economic prosperity breaking out all over
the region.
After a break of two centuries, Asia is
once again trying to return to its glorious
past. Its re-emergence and re-integration
will depend significantly on how its indi-
vidual nations manage relations with
each other. But there is a strong belief
that an integrated and peaceful Asia will
be realised again.
The writer is a senior research fellow at the
Institute of South Asian Studies, National
University of Singapore.