Challenges for the new US leader Will Xi seek another term? Coming disruptions in 2017

Dec 2016 – Jan 2017 MCI (P) 148/08/2016

Can Asia ride out the global economic storm? As the global economic outlook looks set for turbulence amid growing protectionism, the threat of unravelling trade pacts and a slowdown in demand, will the region hold steady? Letter from the Editor-in-Chief You need to know Asia. We do.

Dear readers,

Like people around the world, Asia has been reeling from the shock of recent events around the world, and pondering what the future might bring.

From Brexit to the “whitelash” in the United States and the seeming pivot to Beijing among some in South-east Asia, 2016 has brought some unexpected political turning points.

The implications of these events are likely to be with us well into 2017, and beyond.

We, at The Straits Times, have been covering developments in Singapore and around Asia since 1845. Our network of correspondents and contributors provides insights and an insider’s view of these events.

Our ST Asia Report is a regular publication which compiles some of their recent output and showcases some of their work, which is also available online at www.straitstimes.com

This publication is being distributed in many countries and a PDF version is available online to subscribers of The Straits Times as well.

In this issue, you will find:

• A report on challenges facing the new US President by our Global Affairs commentator Ravi Velloor; • An insight into Chinese President Xi Jinping’s bid to consolidate power by our East Asia editor Goh Sui Noi; • Articles by some of our regular contributors, such as Professor Tommy Koh, Mr Ian Bremmer and Mr Jonathan Eyal; • A quick look ahead to some of the major events in 2017.

The ST Asia Report is part of our ongoing commitment to meet our readers’ information needs in this ever-changing world.

We hope you will enjoy this publication and will return to our products often, simply because: You need to know about Asia. We do.

Best regards

Warren Fernandez Editor-in-Chief SPH’s English/Malay/Tamil Media Group & Editor, The Straits Times

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Challenges for the new US leader Will Xi seek another term? Coming disruptions in 2017 Shefali Rekhi Dec 2016 – Jan 2017 MCI (P) 148/08/2016 Editor, ST Asia Report Can Asia ride out the global Contents economic storm? As the global economic outlook looks set for turbulence amid growing protectionism, the threat of unravelling trade pacts and Can Asia ride out the a slowdown in demand, will the region hold steady? 3 Can Asia ride out the global economic storm?

5 World economy: Will it worsen before it gets better? Asia Report global economic storm? Dec 2016 – Jan 2017 8 The worrying rise in trade protectionism sia is facing a storm of Warren Fernandez 10 Global Politics: Brace yourselves for seismic shift uncertainties in the coming Editor-in-Chief year. The rise in protectionist Alvin Tay 12 Challenges for the new US leader sentiment, most notably Managing Editor Ain the United States, and a slump in Memo from an old friend of the US demand for finished goods and minerals Tan Ooi Boon 14 do not bode well for Chinese, Japanese, Senior Vice-President Indian and South Korean businesses. (Business Development) 16 Davos to Daytona: Rediscovering the case for globalisation Companies in other regional economies that have become more closely Eugene Leow 2017 – A year of disruptions? integrated into the global value chain Head, Digital Strategy 18 also face higher risk. Uncertainty over what measures Irene Ngoo Can Theresa May’s idea of ‘the good government can do’ Vice-President 20 US President-elect Donald Trump will tame the market? introduce once he enters the White Shefali Rekhi House in January is a major area of Editor Stand up for the benefits of trade & concern. 22 Then there are British Prime Minister Copy Desk When disruption trumps old order Theresa May’s efforts to activate Britain’s exit from the European Union Sim Mui Hoon 24 Will Xi go for a third term? after June’s Brexit vote. Chief Sub-editor Markets anxiously await the terms on PHOTO ILLUSTRATION: CHNG CHOON HIONG PHOTO: ISTOCKPHOTO which Britain is able to negotiate its exit Design 26 Kluang: Sleepy town slowly getting its groove back – with a court case complicating things. Peter Williams All that aside, limping Asian “This hesitation has been a major These include: Art Editor 28 ‘To be a runway economy, we need skills but we also economies had been witnessing drag on world trade,” he said. • Labelling China a currency need ideas’ Ong Ye Kung early signs of steady growth, having Overall, the Manila-based Asian manipulator; Anil Kumar persevered with structural reforms, Development Bank (ADB) expects • Withdrawing from the North Graphic Artist opening up of their economies for this region to hold steady with a growth American Free Trade Agreement; and 30 Banks and the barbarians at the gates trade and foreign investments, and anti- rate of 5.7 per cent in 2017, though its • Examining all major proposed Chng Choon Hiong corruption crusades. economists are quick to note that an foreign acquisitions of US Cover Photo Illustration 33 Boardroom wars @ Tata Sons Some economists are optimistic that “extra fragile” external environment companies to ensure equal the region will hold steady but others could derail all that. opportunities for Americans abroad. Editorial research say the unpredictability will push the Arina Nadiah Saifudin 34 Taipei’s beating heart region towards an extended period of The uncertainties Mr Trump may not implement all Benjamin Chua wait-and-see. Most Asian markets went into a these plans but observers will wait to 36 Asian Artist LATIFF MOHIDIN “There are certainly challenges in tizzy as Mr Trump’s victory became see who fills his Cabinet and subsequent Circulation the global environment,” said Mr Manu clear, partly on concerns that his plans announcements. Eric Ng Bhaskaran, chief executive officer to boost government spending would From December, the winds of global Head, Circulation Marketing of economic research consultancy push up interest rates and lead to capital economic uncertainty will blow over Centennial Asia Advisors. outflows. to Britain where the Supreme Court Tommy Ong “Asian economies have weathered Markets have recovered since but will hear an appeal by Mrs May’s Senior Manager (Circulation) them before so there is no reason why there is likely to be volatility ahead. administration against a ruling by the they won’t ride through these new China worries about punitive tariffs High Court in November requiring Reach out to us: challenges,” he told The Straits Times – perhaps up to 45 per cent – on goods her government to seek parliamentary Asia Report magazine. entering the US if Mr Trump keeps an approval to activate Brexit. Global Outlook Forum The defining theme for the coming election pledge though observers say While the Supreme Court’s decision Leong Lin Choo We welcome your feedback and views year for Asia will be how US economic he will be more pragmatic in dealing may be known in the coming weeks, it Senior Manager policy shapes up. with Beijing. is unlikely to end the uncertainty over [email protected] Letters can be sent to “This will be a huge source of Another setback is that the Trans- Brexit. [email protected] uncertainty and anxiety,” he said. Pacific Partnership – a huge trade deal – Already, the EU has trimmed its Circulation & subscription: Key areas of focus will be Mr Trump’s already appears doomed as it will not go forecast for euro-zone growth in 2017 Kitty Tan policies on trade and fiscal issues – and to Congress for ratification in President to 1.5 per cent, citing the challenges Senior Manager (Circulation) Published by what the US Federal Reserve does on Barack Obama’s lame-duck period – and of Brexit and rising inequality. The [email protected] The Straits Times, Singapore Press Holdings interest rates, he said. Mr Trump has vowed to oppose it. forecast for Britain was halved, owing

For advertising enquiries: Other major questions: How will Politico news website reports a to the uncertainty over the Brexit vote. Printed by China’s economy perform? And will transition team document that cites Growth in Britain will fall to 1 per cent Sharon Lim Ling Allegro Print Pte Ltd Manager global corporations overcome their various proposals to be taken up in the from 1.9 per cent in 2016, the European hesitation to grow capital spending? first 100 days of the Trump presidency. Commission said. (Business Development) All rights reserved. No part of this publication may be reproduced in whole or [email protected] in part without written permission from the publisher. 2 3 Cover Story Cover Story

“The situation is a bit like Syria right economies which run large surpluses turbulence over Chinese currency policy Outlook for Asian “The longer the saga continues, the now,” said a banker, who did not wish to with the US. and the volatility earlier in 2016 caused longer the associated uncertainty will Risks to regional be quoted. “We don’t know if there will “However, the cold calculation first by concerns over China’s slowdown countries be priced into equities and currencies, outlook: be a power vacuum on the economic of self-interest suggests that the new and later by Brexit. (GDP growth % per year) dampening corporate investment and front in Asia and which of the other administration will not go too far since “Asian economies have become more damaging the European economy as • Slow recovery in US, Euro players will fill that spot.” the US has gained much from world resilient over time,” he said. 2015 2016** 2017** a whole,” wrote financial observer area, Japan Mr Bhaskaran, however, believed it trade,” he said. So is it the calm before a storm? Anthony Fensom in The National • Interest rate hikes by the US could well be otherwise. He agreed that if the Fed decides Or, is it the calm that will blow over % Interest, a US publication. 6.1 Federal Reserve “Headwinds to global trade and to step up the pace of normalising the storm? East Asia* And this comes as France, Germany • Political pressures against protectionism have already been monetary policy, it will lead to capital We’ll have to wait and see. 5.8 and the Netherlands prepare for 5.6 openness growing since the 2008 crisis broke. outflows, pressure on currencies and elections in 2017, amid the emergence • Moves towards United “The new American administration other stresses. 6.9 of far-right candidates pushing for Kingdom’s exit from the seems uneasy with the degree of trade But he said Asian countries have China protectionist policies. 6.6 European Union openness America has maintained weathered several such episodes of [email protected] 6.4 “The serious risk is growing • Private debt on the rise and may well add more trade- stresses quite well, from the May 2013 The writer is Asia News Network protectionism,” said Dr Juzhong related measures, particularly against “taper tantrums” to the August 2015 Editor, The Straits Times  2.4 Zhuang, deputy chief economist at ADB. • Natural disasters Hong Kong 1.5 “This could further impact on exports 2.0 of many countries in Asia, which are growth, from 6.6 per cent in 2016 to 2.6 already weak,” he told this magazine. 6.4 per cent in 2017 and 6.3 per cent Republic 2.6 Global demand growth, meanwhile, in 2018, the ADB said. of Korea 2.8 is showing a delayed recovery. The pace “What we are seeing in China is in the US, the euro area and Japan in managed growth deceleration,” said Ravi Velloor 0.6 2016 led the ADB to lower its aggregate Dr Zhuang. “This reflects structural Associate Editor, The Straits Times Taiwan 0.9 growth forecast by 0.4 percentage point reform to reorient the economy to a 1.5 to 1.4 per cent for 2016. The bank more sustainable growth path.” expects this to be marginally better at South Asia is emerging as a bright 1.8 per cent in 2017. spot, driven by India, with its growth % Stratfor, a global US-based set to expand from 6.9 per cent in 2016 7.0 6.9 intelligence firm, noted: “The global to 7.3 per cent in 2017. World economy: Will it South Asia* recovery has been anaemic and India, under Prime Minister Narendra 7.3 looks poised to stay that way for Modi, eased foreign direct investment 7.6 some time, thanks to low investment, rules further in June, seeking to create India 7.4 weak innovation and inauspicious more jobs in the retail, defence and civil aviation sectors. The nation launched worsen before it gets better? 7.8 demographic trends.” a residency programme to encourage 4.0 Regional outlook investors to stay longer. Mr Modi’s Pakistan 4.7 recent move against tax evasion and 5.2 Experts feel confident Asia is not Five key worries headed for another financial crisis. graft by cancelling more than three- 4.8 Regional economies are much quarters of banknotes has reinforced have emerged to his government’s commitment to Sri Lanka 5.0 stronger now and can withstand crimp global growth. 5.5 shocks better, economists and regional reforms, although the list of issues to observers agree. be addressed remains long – with labour And the big worry reforms at the top. Having focused on lifting domestic The economies of South-east Asia is that advanced % consumption and structural reforms, may face more turbulence, given their 4.4 they offer relative stability for their nations are poised to Southeast 4.5 increased focus on trade, but a sharp people and businesses, compared with Asia* 4.6 downturn is not expected. South-east decades ago. They are creating millions slow and some may 4.8 Asian economies “will see growth edge of jobs, though this will not be adequate up to 4.5 per cent on the back of robust fall into recession. Indonesia 5.0 to raise income levels for the masses government infrastructure investment, 5.1 and alleviate poverty. A rise in private supported by strong performances from year ago when Interna- 5.0 and household debt remains a matter the Philippines and Thailand”, said the tional Monetary Fund Malaysia 4.1 of concern. ADB. (See story on Singapore on page 7). (IMF) chief economist 4.4 Overall, there is concern that China’s The big worry remains the state of Maurice Obstfeld arrived 7.2 slowing pace of growth will hurt growth globalisation, given that many regional for other regional economies; optimism Myanmar 8.4 economies benefited from the process. at the institution, three 8.3 over markets such as India, Indonesia Many which built their financial Abig worries loomed. The first was and the Philippines; and hope that the security on trade beyond domestic whether China, the No. 2 economy, 5.9 remaining economies will show great Philippines 6.4 borders will find it a struggle to cope would succeed in rebalancing its flexibility to weather any likely shocks with the decline of globalisation. Many 6.2 and turnaround. (See chart). economy. The others were: the are small-scale entrepreneurs unable to struggles of commodity exporters 2.0 “The prospects for Asia have always survive tough times. Singapore 1.8 been good,” Mr Andrew Sheng, President Medium to longer-term investors, suffering steep falls in demand, and 2.0 of Hong Kong based Fung Global meanwhile, will wait to see America’s the US Federal Reserve’s first liftoff 2.8 Institute, told this magazine. “We simply moves and whether regional economies in interest rates. Thailand 3.2 need to get it into our mindset that if we step up to strengthen regional cooperation These days, to all of the above – the 3.5 are now the manufacturer to the world, agreements. Fed is widely believed to be poised for 6.7 we have the savings and the middle If, as expected, Mr Trump decides to a second lift in rates – add two more. class to generate our own consumption Vietnam ditch the TPP, analysts expect a boost for One is a persistent slowdown in the 6.0 models. This is beginning to happen as 6.3 the Regional Comprehensive Economic growth of trade relative to gross domestic China swings from exporter to consumer. Partnership, which includes the 10 product and deflationary pressures. The NOTE: *Data for all countries in the group, India will follow soon. Indonesia is also a member states of Asean and six countries **Projections for the year major market.” with which Asean has existing free trade other, political uncertainties are rising Source: ASIAN DEVELOPMENT BANK China is expected to continue its agreements – Australia, China, India, across the globe and that’s bad news for STRAITS TIMES GRAPHICS gradual transition to slower, sustainable Japan, New Zealand and South Korea. the world economy. ST ILLUSTRATION: MIEL

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These factors led the IMF to yet century, when World War I ended a is that advanced nations are poised to next four years to be 60 per cent. That’s again cut 2016’s growth forecast for time of open trade and protectionist slow, and some may fall into recession. because the current expansion, though the global economy to just 3.1 per policies came to the fore during the Fitch Ratings, for instance, recently sluggish in comparison to previous cent in the World Economic Outlook Great Depression”. cut its projection for 2016’s US growth growth periods, has run for an unusually published early October. That’s lower Alongside has come a drop in the to 1.4 per cent, from 1.8 per cent long 88 months. But the US Fed may probably be the than the forecast it offered a year ago, popularity of political leaders and their three months ago. Meanwhile, euro- only central bank looking to tighten which was revised only this April to 3.2 perceived legitimacy. Ironically, only zone growth may have peaked earlier those leaders who whip up nationalism policy. The big worry, really, is that per cent growth – considered lower than in 2016. are bucking this trend, notes Mr Sharma. central banks elsewhere may not have “moderate” expansion. “The outlook for the advanced the solutions to kick up global growth To be sure, there are bright spots countries is best described as a low- Things, clearly, are slipping. Should on the Asian horizon: The Philippines, this time, many having cut rates to deep the world economy expand any slower growth, muddle-through path,” says lows already. Vietnam and Indonesia are among Fitch chief economist Brian Coulton. it would begin to feel like a recession. the notables in South-east Asia that That won’t stop them from trying “Advanced-country growth over 2016 to “On the political front, conditions are doing well. South Asian nations, to stimulate growth, of course. The 2018 will be hardly any better than the have moved to the downside,” says Mr generally, are not doing badly either, European Central Bank, for instance, Obstfeld. “A year ago, we did not expect including Pakistan. lacklustre 1.5 per cent average growth is expected to continue its asset- purchase programme – quantitative Brexit to happen. Beyond that, there But these countries do not have rate seen over 2011 to 2015. Moreover, easing, essentially – beyond the March enough ballast to lift regional boats. And downside risks to advanced-country is a continuation and intensification of 2017 date that it is scheduled to end. negative political developments. There the Philippines, under President Rodrigo growth have increased.” The IMF has cut 2016’s growth forecast for the global economy to just 3.1 per cent. That’s Although the US labour market Meanwhile, the new monetary policy is a backlash against globalisation that Duterte, is making foreign-policy shifts lower than the forecast it offered a year ago, which was revised only this April to 3.2 per has tightened and the Fed may feel approach of the Bank of Japan looks holds out negative prospects for not only cent – considered lower than “moderate” expansion. Add to this a growing backlash against that may well impact the economic confident enough to raise rates at year like it will take the policy rate deeper igniting trade growth, but actually, (the globalisation and the outlook for world trade is murky. PHOTO: REUTERS upswing it is currently enjoying. into negative territory. end – one more reason money may still likelihood of) an increase in protectionist But how long can you keep the leave China in large doses – some think measures in the coming years.” A CASE OF MUDDLING gas pedal pressed to the floor without China seems to have arrested the the publication of two best-selling the No. 1 economy, too, may have a It is a scary prospect, especially for causing massive economic distortions, growth slowdown, its struggles with books on the global economy, puts the THROUGH recession on its hands before long. trade-dependent economies such as its economic rebalancing look set to population issue at the top of the list. is the question. Still, these are minnows when it A recent survey by the Wall Street Singapore and Malaysia, not to speak of continue for many years, with the fear “We grew up thinking the biggest comes to powering global growth. The Journal showed the odds of the next the bigger economies in the region such that things may worsen. One worry is threat was far too many people,” he big worry, according to some analysts, economic downturn happening in the [email protected]  as South Korea and Japan. A slowdown that the debt pile-up has now begun to says. “Today, the problem is far too in trade, caused mainly by poor demand affect a sector hitherto considered fairly little. Demographic trends have become from China and its proclivity to have healthy – real estate lending – as Beijing a headwind from what used to be a more done at home, has already begun frantically tries every gas pedal it has tailwind.” at its disposal to keep driving growth. In China, he points out, the working- the stability to ride through this to show on their economic graphs – see The slowing current phase.” Besides, China’s reluctance to age population actually shrank in 2015. how Singapore’s economy has gone into countenance bad debts in its banking In India, fertility rates have dropped Singapore economy a funk (see other story). system – its lenders offer borrowers dramatically. Mr Sharma thinks the SHIFTING TRADE But more is to come. The message some of the easiest refinancing options current malaise has nothing to do Chia Yan Min FLOWS emerging from the United States in order to stop them from announcing with the lingering effects of the global Economics Correspondent, The Straits Times International trade has fallen to presidential campaign is not at all soured loans – only means that the can financial crisis, and more to do with its lowest level since 2009, alongside reassuring, even if some of it is related is being kicked down the road. population growth and productivity. ingapore’s small, trade- lacklustre economic growth. to the heat of election rhetoric. Indeed, In Japan, he says, trend growth But some economists say the dependent economy is under some of the promised initiatives meant cannot be more than half a percentage slowdown is not merely cyclical, and CAN INDIA PROVIDE the weather – and likely to to boost trade, whether the Asia- point simply because of the pace at S lower levels of global trade might remain so for some time. related Trans-Pacific Partnership or A BOOST? which its population is ageing. become the new normal. While the country has not yet The IMF identifies India, Asia’s No. This is because growth in developed even European-linked pacts such as sunk into a full-blown recession, its 3 economy and the world’s second- economies like the United States is the Transatlantic Trade and Investment SHUTTERS ARE fortunes are tied closely to those of largest nation by population, as an increasingly driven by services rather Partnership (TTIP), seem to be at risk. the world economy and the outlook Asian growth spot. But to many, that’s GOING UP than the trade in goods. In the East Asian region, things there is far from cheery. an illusion as well. As the IMF pointed out in its report Chinese companies are increasingly are even less reassuring. Although The Straits Times looks at four For one thing, like China, India is in October, the other worrying trend is sourcing from within the country, key contributors to slowing growth bent on lengthening its domestic supply deglobalisation. For nearly four decades, instead of importing. in Singapore. chain. This is the reason it is pushing as money and goods flowed from every This trend could weigh on regional initiatives such as Make In India. Worse, corner of the earth to the other, the trade even in the long run – a gloomy rather than opening its markets, it may world had begun to assume this was LACKLUSTRE GLOBAL PHOTO: BLOOMBERG prospect for Singapore. be actually pruning access to them. something to be taken for granted. GROWTH By some estimates, Prime Minister However, after peaking in 2008, around DISRUPTIVE CHANGE The world economy continues to stable from 2010 until mid-2014, at Narendra Modi’s government, which the time the global financial crisis hit lack a strong growth driver. There are around US$110 a barrel. Since then, Technology has transformed almost carries a profile of being progressive home, global trade started to decline more speed bumps ahead, especially they have almost halved. every industry – from food delivery and pro-business, has imposed no fewer as a share of gross domestic product. on the geopolitical front. Companies in Singapore have not to manufacturing. than 500 protectionist measures since With that has come a backlash Most prominent are uncertainties been spared the effects of this protracted There is no easy solution to taking office in May 2014. against immigration, most dramatically over the outlook for US foreign policy downturn. Tens of thousands of jobs this – the ever-increasing pace of Mr Ruchir Sharma, head of emerging manifested in the dramatic results this and trade relations under President- have been axed and some companies technological change means jobs will markets for the Wall Street firm Morgan June of the British referendum on elect Donald Trump, who outlined an have defaulted on bond payments – more or less be in a constant state Stanley, identifies four broad trends leaving the European Union. Mr Barry isolationist agenda during his campaign. sparking concerns over banks’ exposure of flux. that are affecting the global economy: Desker, the Singapore diplomat and to the sector. For now, all eyes are on the Committee on the Future Economy’s India is bent on lengthening its domestic depopulation, deglobalisation, debt former head of the trade promotion PROTRACTED OIL CIMB Private Bank economist Song supply chain, hence initiatives such as Make that is spiralling out of control and de- body, warned recently (see next story) Seng Wun says: “There eventually will report due out next January, which will In India. But instead of opening its markets, democratisation. that the era of globalisation may be PRICE SLUMP be a cyclical upturn, it’s just a question map out a blueprint for Singapore’s it appears to be pruning access to them. Mr Sharma, who has acquired the drawing to a close, “akin to the shift World oil prices had been fairly of when, and whether companies have economic future.  PHOTO: IANS status of something of an oracle since that took place at the start of the 20th

6 7 Essay Essay

Barry Desker For The Straits Times US, Japan and the EU recorded declining By contrast, the US faced the increased benefits such as free university shares of world exports. An interesting challenge of creaky legacy infrastructure tuition and inflation-linked pensions in and often overlooked aspect is that in a period where there was a push for countries where such benefits are not trade between developing countries has lower taxes and smaller government, provided. The worrying rise in increased significantly. The share of such leaving the state and federal authorities The risk of rising trade protectionism “South-South” trade increased from 8 with a reduced capacity to implement has increased. The failure of the Doha per cent in 1980 to almost 25 per cent major infrastructure projects. Round has highlighted the impasse in 2015. East Asia has been a major beneficiary in global trade negotiations. Trade trade protectionism The rapid economic growth in of open global markets. Today, China negotiators emphasise that agreements this period also reflected the impact can only be reached through such of international supply chains. The The losers in international negotiating rounds where “nothing importance of logistics and efficient trade are upset that high- is agreed, until everything is agreed”. As protectionist supply chains meant that companies paying jobs requiring With the admission of Afghanistan in sentiments gain such as Hong Kong’s Li & Fung, which July 2016, there are now 164 WTO managed the entire supply chain for minimal skills have now members. Many have no significant ground, countries global brands, earned US$4 for every moved to distant shores role in international trade. With every are losing sight of US$1 earned by original equipment where the same product member having a veto, it is impossible manufacturers. Similarly, branded luxury how trade flows have can be manufactured at to reach agreement. goods companies in the US and the EU The problem is compounded by increased their earnings by outsourcing a much lower cost. transformed the developing countries that see the production to manufacturers in a range WTO as a social welfare agency. As world for the better of emerging economies. has emerged as the world’s leading for developed countries, many push In East Asia, the rise of distributed exporter and has the capability to the envelope in seeking “behind the manufacturing resulted in the growth participate in the entire manufacturing border” agreements on issues like of electronics as well as the textiles value chain, from simple assembly tasks n America and Britain, inward- and garments industries throughout to sophisticated skills and research- the environment, labour standards, looking protectionist policies the region. based innovative solutions. The newly intellectual property, competition draw growing support. With that, These industries were the key to industrialised economies of South Korea, policy and state-owned enterprises, an era of globalisation may be the initial economic transformation Taiwan, Hong Kong and Singapore have which have an impact on domestic drawing to a close, akin to the of the region. Beginning with simple been followed by Malaysia, Thailand, governance and are contested by Ishift that took place at the start of the developing countries. “screwdriver” electronics assembly Vietnam and Indonesia. After being a 20th century when World War I ended operations, manufacturers in the region laggard for three decades, the Philippine That has led to a flight to bilateral a time of open trade, and protectionist ST ILLUSTRATION: MIEL upgraded their skills and capabilities economy has performed well in recent and regional preferential trading policies came to the fore during the over time, with simpler assembly years and recorded the highest growth arrangements, often mistakenly termed Great Depression of the 1930s. rate of 6.9 per cent in Asean in the first “free trade agreements”. However, Britain over immigration trumping the (CECA), for leading to an influx of operations moving to other parts of the six months of 2016. these agreements have generally had desire to retain access to the European foreign workers, a view frequently region. While domestic manufacturers PROTECTIONIST minimal impact in expanding trade and single market, Britain looks set for a articulated on social media. were significant, especially in South have often been dominated by political SENTIMENT hard Brexit. The growing uneasiness Korea and Taiwan, openness to foreign ‘PUSHBACK’ IN U.S., ownership facilitated the entry of considerations. United States President-elect Donald over immigration and the resettlement EAST ASIA’S EUROPE While the TPP is intrusive, it has the Trump has attacked the proposals for of refugees is also having a toxic impact multinational corporations (MNCs) into Such trends, which have been potential to increase regional trade, trade and investment liberalisation in on politics within the EU. German TRANSFORMATION the region. replicated in Mexico, Brazil and the Trans-Pacific Partnership (TPP) Chancellor Angela Merkel has been Over the past 30 years, merchandise In textile and garment manufacturing, although it is unlikely that the US will elsewhere in developing countries, signed by 12 states. He is also against forced to retreat from her open-door and services trade has increased by the existence of quotas in the US, the EU obtain ratification by its Senate before have resulted in the “pushback” seen current negotiations between the US and policy towards refugees. about 7 per cent annually on average, and other developed countries up to the the inauguration of the new president. in the American election and the British European Union for the Transatlantic Even in Singapore, which has with the growth in services playing a beginning of 2005 resulted in Singapore, By contrast, the current negotiations referendum. The losers in international Trade and Investment Partnership (TTIP). benefited from open markets as an larger role. World trade increased twice Taiwan and Hong Kong retaining among the 10 members of Asean and trade are upset that high-paying jobs The strong reactions in the American entrepot, is an immigrant society as fast as world production. Particularly significant manufacturing capabilities, six partner countries (Australia, New Mid-West to the loss of manufacturing and has an ageing population with a significant was the shift away from even though their labour costs had risen requiring minimal skills have now Zealand, China, Japan, South Korea and jobs, the fear among the non-college declining birth rate, there is resentment autarchic policies by China, India and significantly. WTO agreements protected moved to distant shores where the same India) for a Regional Comprehensive educated about competition from of new immigrants and foreign workers. many developing countries, which their exporters from competition by product can be manufactured at a much Economic Partnership (RCEP) have immigrants, worries about rising They are seen as competing for jobs, moved away from policies of the 1970s lower-cost producers such as Bangladesh, lower cost. Mr Trump has won support stalled. RCEP is likely to codify existing emerging powers like China and the causing overcrowding and reducing and 1980s promoting self-sufficiency, Vietnam and Indonesia that were in the Rust Belt by claiming that he will agreements reached on a bilateral basis belief among white Americans that opportunities for locals. This has forced a protection of infant industries, latecomers to manufacturing textiles “Make America Great Again” by raising but it is unlikely to achieve major they were no longer in control of their cutback in the employment of foreigners nationalisation of the industrial and and clothing for export. tariffs and bringing back manufacturing breakthroughs in expanding regional own destiny propelled Trump to the and the setting of more modest targets commodities sectors and the promotion At the same time, East Asian exports to the American heartland. trade. presidency. These fears outweighed the for GDP growth. Surprisingly, for an of state-owned enterprises. were supported by the rapid upgrading It has also had an impact on European Like the TPP, it runs the risk of being benefits to America’s services sector, economy whose trade is three times According to the World Trade of infrastructure. World-class airports, politics. Chancellor Merkel has stressed politically unpopular as the mood turns especially in tech-savvy Silicon Valley, its GDP and which has benefited from Organisation (WTO), exports of ports and highways were constructed. that the EU accounts for 7 per cent of away from open markets and freer trade. Manhattan’s finance sector and those market-opening measures, at campaign developing countries have grown fastest State-of-the-art telecommunications global population, 25 per cent of world cities that are home to American rallies during the general election since the 1990s. While developing and IT infrastructure were built while production and 50 per cent of social companies with global value chains in 2015, the opposition Singapore countries accounted for 34 per cent of schools and universities aspired to reach services. Such levels of social services that have enjoyed rapid growth in Democratic Party rejected the TPP and world exports in 1980, by 2015, their the standards set by leading institutions are not sustainable. But democratically The writer is a distinguished fellow recent years. criticised free-trade agreements, such share had risen to 43 per cent. China’s in their fields. As latecomers, they elected governments in the EU face at the S. Rajaratnam School of This “pushback” was also seen in the as the India-Singapore Comprehensive share of world exports grew from 1 per benefited from the innovations that had pressures for the continued provision International Studies, Nanyang Brexit vote in June. With concerns in Economic Cooperation Agreement cent in 1980 to 14 per cent in 2015. The taken place in the developed countries. of social services as well as demands for Technological University. 

8 9 Guest Column Guest Column

Ian Bremmer For The Straits Times Then there’s Russia. President Vladimir Putin has spent the past 18 months trying to undermine US power and influence at every turn in this election cycle – his target was never to steal the election outright, but to weaken the sense of American exceptionalism which he believes the US has been flouting. Global Politics: Brace In the eyes of many, he succeeded and then some. But the good news is that in the short term, a President Trump will help stabilise relations with Russia, making them at the very least less openly hostile. yourselves for seismic shift At the end of the day, the biggest challenges Mr Trump will face upon assuming the presidency are not of his own making – the political atmosphere in Washington has only grown more toxic over the past eight years and limits on US power have only become more obvious. Mr Trump came to t’s done. Mr Donald Trump is now power by highlighting these challenges and claiming he alone officially on track to become, at could fix them; let’s hope so, because they’re his problems now. least on paper, the most powerful person in the world. That has plenty of people worried, both The writer is president of Eurasia Group and author of Iat home and abroad. Superpower: Three Choices For America’s Role In The World. It’s no secret that the vast array  of challenges awaiting the new US president is formidable. By any measure, Mr Trump will be the most unpopular person ever to be elected US president. Rather than trying to reach out to ST ILLUSTRATION: MANNY FRANCISCO those Americans who viscerally dislike him, he doubled down on the white, Trump and Asia: Expect Anxiety, anxiety and tension in their alliances with the US. Mr disenfranchised vote that got him the Trump will push them, and they will push back—and Republican nomination in the first place Tensions and Instability need to be seen doing so. and rode their support to the White Key ministries in Seoul and Tokyo have already held House. For the next four years, Mr The election of Republican Donald Trump calls into multiple emergency sessions following the election; Trump will be hounded by people who question much, if not all, of America’s historically positive President Park Geun Hye even convened an emergency find his mere presence in the Oval Office role in preserving Asia’s stability and prosperity. And things meeting with her National Security Council, an event could change quite significantly. Here are excerpts from anathema to what they believe America normally linked to a North Korea provocation. Eurasia group’s report on the future of US-Asia ties: stands for. To be fair, Mrs Hillary Clinton The US alliance system may be facing one of its most would be facing a similarly divided and serious challenges since its formation in the 1950s. We impassioned electorate, perhaps without US-China relations do not believe that US alliances will break. They are too a sympathetic Congress backing her. For a Chinese leadership that prizes stability and valuable to both sides and too deeply institutionalised. Yet But the predictable Mrs Clinton predictability, Republican Donald Trump’s election is if Mr Trump’s campaign rhetoric is taken at face value, we would have been a stabilising force on an unwelcome and surprising development. Mr Trump’s Protesters in the US calling for the rejection of the Trans-Pacific Partnership trade deal in expect these alliances to undergo unprecedented stresses the global stage; Mr Trump is anything October 2015. Asian countries joined the TPP in 2015 to balance against Beijing, but the purported approach will generate tension and friction in which could cause real damage. The strategic weight of US but that. This has allies on edge – Mr election of Mr Trump makes Beijing look more like the stable economic power for the US-China relations, even as it creates more strategic space alliances in Asia may decline. countries to hitch their economic wagons to. PHOTO: AGENCE FRANCE-PRESSE Trump has promised to backtrack on for China in Asia. In Japan, Prime Minister Shinzo Abe will use this security pledges, openly and fiercely The timing of this election could not be worse for shift in US policy to press for faster defence reforms and Beijing, which wants stability in the run-up to the Fall 2017 questioned America’s membership in expenditures, including revision of the constitution. leadership transition. Beijing will be uniquely sensitive to Nato, and made trade protectionism was in decline before Mr Trump arrived are difficult votes ahead in Italy, France There are early indications that leaders in Thailand and US policy in this period and react (or overreact) accordingly. the backbone of his campaign pitch on the political scene. and Germany in 2017. The migrant crisis the Philippines, ironically, may use the election of such a to the American people. In the Middle East, Saudi Arabia and remains unresolved. There is no unity Mr Trump and his current advisers have virtually no experience dealing with the Chinese government non-establishment politician to reset the relationship. Major It’s hard to separate the genuine from Iran are fighting a proxy war that feeds on how best to manage increasingly so the fabric of the official relationship–channels of security partners such as India, Singapore and Vietnam the bluster, but if Mr Trump managed to conflict in multiple countries. Wars rage complex relations with Russia and communication, mechanisms for dialogue, etc. will have will carefully hedge away from an uncertain US in a more implement even a quarter of the things on in Iraq, Syria and Yemen. Continued Turkey. Washington is all but irrelevant to be rewoven from scratch. pronounced manner. lower oil prices make it more difficult to these challenges. he’s suggested over the course of the last On North Korea, Mr Trump has said the US should make 18 months, it would be the most seismic for governments to cope with challenges Much of Asia finds itself in China’s this China’s problem and force China to solve it. Beijing Trade from within. It’s not clear what difference lengthening shadow. Prior to the US shift in global politics since the fall of won’t take the bait and will resent such a move. The Trans-Pacific Partnership (TPP) is dead and so is US any American president might make in election, Asian countries made the the Soviet Union. And this is before we On Taiwan, Trump’s advisers have advocated a more trade liberalisation towards the region. Mr Trump will be get to Muslim bans and building walls, this region. Which, depending on your strategic choice to join the Trans-Pacific forceful US role defending Taiwan. His advisers have also more focused on protecting US workers than opening up which will inevitably provoke responses opinion of Mr Trump, could be a good Partnership (TPP) as a way of balancing called for a buildup of naval capabilities to balance China’s markets for US exports. The export-oriented economies of from abroad. or bad thing. against Beijing. TPP’s stumbles in the US growing presence in the Western Pacific. Asia will see a strategic shift away from them and adjust And then there are other structural Europe, America’s longest-standing Congress gave them pause; the election accordingly. concerns to be worried about when it and most like-minded ally, is divided of Mr Trump will only make Beijing look Allies It will be interesting to see if Japan ratifies TPP after Mr and weak. The Brexit drama has only more like the stable and sane economic comes to American foreign policy even US allies, especially Japan and South Korea, are Trump’s victory. Vietnam and Malaysia have already put beyond Mr Trump taking the reins. The just begun. Populism is now on the rise superpower to hitch their economic decidedly on edge; they see a future full of uncertainty, TPP’s approval on hold. reality is that US international influence on both sides of the Atlantic, and there wagons to.

10 11 On Our Radar On Our Radar

Ravi Velloor come around to accepting that the trade could lead to higher interest rates first-ever joint naval exercises in the Associate Editor, The Straits Times pacts – the Trans-Pacific Partnership (TPP) that might lead to money flowing out South China Sea. focused on Asia, and the Transatlantic of Asia. On the positive side, it could In fact, several corners of Asia will Trade and Investment Partnership (TPIP) lead to a growth spurt in America that need urgent presidential attention. Mr with Europe – are important to America’s could only prove beneficial for the rest Obama’s pivot, or rebalance, to Asia, long-term interest. of the world. is in tatters after the Philippines, a key Challenges for That will ease worries in financial Externally, several priorities loom for domino, seems to have fallen into China’s markets, whose behaviour had always the next incumbent in the White House. thrall under the new administration of seemed to suggest they’d prefer a In Europe, the big one is Russia. President Rodrigo Duterte. Since the Clinton presidency. As Mr Obama’s tenure winds down, it Philippines is America’s oldest treaty In other words, the world wants is hard to imagine that this American ally in Asia, this exposes a key plank the new US leader in Pacific security, with the danger America to stay open. president had, in fact, sent his Russian The longer-term economic challenge counterpart Vladimir Putin a clock that more dominos that have maritime – and this plays into the likelihood of early in his tenure, as a signal he territorial issues with Beijing may go Many urgent issues measures to spur a slowing economy – is wanted to “reset” ties with Moscow. the same route. This would mean the await Mr Trump, to fix America’s crumbling infrastructure It is one major relationship his US significantly losing influence in the without busting the national finances. administration has fumbled, thanks Western-Pacific ultimately. from uniting the Many American airports, for instance, in part to Mrs Clinton’s stewardship Pew research suggests that Americans nation and fixing are a mess compared with their Asian of the State Department. But even are getting less and less enthusiastic peers, as Mr Trump, accurately for once, after her departure, things have only about getting involved in the problems its infrastructure to pointed out on the stump. Its bridges are gone south, most recently over Syria. of the world outside their borders. improving global old and creaky. There is much to do for Mutual suspicions – Mr Putin’s fear But certain issues have such global the efficiency of its ports. of encirclement by Nato and Western dimensions that even the most inward- trade and diplomacy Since massive infrastructure nervousness of Russian expansionism looking American leader may find it investments will have to be led by public – have stoked the fires. imperative to wade into those waters. investment, it may well lead to higher The impact of all this has been felt fter the most divisive US government debt levels in America and not just in Europe but in Asia as well. [email protected]  presidential election in push inflation higher. That, in turn, Weeks ago, Russia and China held their living memory, America has handed the reins to Mr Donald Trump, a real Aestate tycoon who was standing for his first public office and has no experience at all in public service. It is not going to be an easy ride. Major challenges await the septua- An genarian Mr Trump as he begins work in the third week of January. There is no denying he has big shoes to fill: Mr insider’s view into the Barack Obama as President has been impressive, both as a personality and a performer. corridors of power To begin, the new President will have to initiate a healing process after the that the author most divisive, hate-filled campaign seen once walked in recent memory. through. This book Mr Trump’s refusal throughout the Republican President-elect Donald Trump giving the thumbs up to the crowd during his campaign to say he would accept the acceptance speech at his election night event in New York on Nov 9. He defeated Democratic is an engaging election results if they went against him presidential nominee Hillary Clinton to become the 45th president of the United States. read penned by a PHOTO: AFP suggest that the ill feelings raised by gifted writer with two of the most divisive public figures in American history may linger on for great empathy for months. He now has the job of not just He has made a good beginning Now, after 88 months of expansion, his country and assuring, but ensuring that America’s by promising to be president to all some think the US economy may be countrymen. minorities, particularly Muslims and Americans. poised for a cyclical slowdown. Through ” Hispanics, continue to feel secure in Sooner or later the domestic economy no fault of his, Mr Trump could have this LAI KWOK KIN their homeland. also could drift up his list of priorities. thrust on him. founder and The Trump position, even if many Arriving in the midst of the worst There will also be plenty to do for managing director sense much of it was just a play to the economic crisis since the Great the global economy. For the immediate, of WeR1 Group ground, has inflamed many, including in Depression, Mr Obama had managed to the task is to assure the world that the white working class majority that pull the US economy out of its morass. after the deeply inwardly focused US backed him so fervently. The backlash From June 2009, he oversaw a period of election campaign, America stays open against him has become all too evident. steady but unspectacular growth that’s for business. For this, some backtracking This victory could have an unpredictable helped him bequeath a strong and on the rhetoric against free trade is impact on America. competitive economy to his successor. important. Hopefully, Mr Trump will Now on sale at all major bookstores and www.stpressbooks.com.sg 12 13 The Gold Circle The Gold Circle

Tommy Koh For The Straits Times As a friend of both the US prosperous and friendly to the US is and China, I would like to South-east Asia. say that you should The sub-region has a population not regard China as of over 600 million, hosts more US an enemy of the US. investment than China, Japan and India Memo from an old friend The truth is that you are put together, is blessed with abundant dependent on each other. natural resources and sits astride some China is your biggest of the world’s most important sea lanes. creditor country and the US The sub-region also has a world-class of the US is China’s largest export market. regional organisation, Asean. Beyond economics, you have congruent Since 2009, except for 2013, the US interests in nuclear non-proliferation, president has held an annual summit Dear President-elect Trump climate change, the Korean peninsula, meeting with the 10 leaders of Asean. Iran, terrorism and other issues. The US president has conscientiously I write this memo as an old friend For over 40 years, every US attended the annual meeting of the East of the United States. I also do so as administration since the Nixon Asia Summit. someone who has worked for many administration has pursued a bipartisan It would be very good if you could years to promote mutual understanding policy towards China. The policy is to reaffirm the US commitment to Asean and friendship between Asians and engage China and to persuade it to be and make every effort to attend the Americans. a responsible stakeholder. The policy ST ILLUSTRATION: MIEL two summits. It would also be greatly The relationship between America is to cooperate with China where your appreciated by this region if the Trump and Asia is particularly important interests converge, to compete where America’s future is in the sunrise administration could reaffirm the US because Asia is rising and some in they diverge and to manage your industries and not in the sunset support for Asean unity and neutrality, America may perceive the rise of China differences on the basis of mutual industries. The truth is that, on the as well as the central role it plays in the as a threat to American prosperity and respect and mutual benefit. It would whole, free trade and globalisation are regional architecture. security. be good if you could affirm your support forces for good and not evil. I join the many friends of America in for this policy. As a businessman, you know Asia in saying that we would very much EMULATE REAGAN There are many in Asia who worry how important it is for the business like to see you succeed as president. My first piece of advice is for you that the US and China may fall into environment to be stable, transparent Good luck. to emulate former president Ronald the Thucydides Trap. We do not want a and rules-based. What is true of the Reagan. When Mr Reagan was elected hot or cold war between the incumbent domestic economy is also true of the Yours respectfully, as president, there were fears that his hegemon and the challenger. world economy. We need a stable, right-wing posture and election rhetoric On the question of your trade policy, transparent and rules-based international Tommy Koh might lead to a war between the US and many in Asia are extremely nervous economic order. The WTO provides the Soviet Union. about your protectionist election such an order for international trade. Mr Reagan ran for office from the rhetoric. We understand that one of your The WTO serves US national interests. right but he governed from the centre. U.S. President-elect Donald Trump, his wife Melania and son Barron greet supporters during constituencies consists of workers who The writer served as Singapore’s his election night rally in New York. PHOTO: REUTERS He appointed strong, competent and have lost their jobs because of the closure US-ASEAN Ambassador to the US from 1984 experienced men and women to serve of their industries or companies. Many RELATIONS to 1990. He is currently co-chair of in his administration. He empowered of them have remained unemployed for the China-Singapore Forum and the many years. Their towns and villages Of all the sub-regions of Asia, the one Japan-Singapore Symposium. them and did not try to micromanage held accountable for those remarks. You the trust of the Japanese people in the have been devastated by such closures. sub-region that is the most peaceful,  them. need not have a bad conscience about reliability of the US security guarantee They have become victims of a vicious In the same way, my hope is that it because every US president before is undermined. If Japan becomes a “nor- circle. You have promised to bring their you will recruit some of the most you did the same thing. You are just mal” country and decides to acquire qualified, competent and experienced following a well-known US tradition. nuclear weapons, this will set in train jobs back and to prevent US companies men and women, within and without developments in North-east Asia which from relocating their manufacturing the Republican Party, to serve in US-JAPAN could destabilise the whole region. operations overseas. your administration. The Republican It is therefore important for you to As a good businessman, you know Party has a deep talent pool. Since RELATIONS reassure your Japanese ally of your that competition is a fact of life and you are an iconoclast, you should also The country in Asia that needs commitment to the US-Japan security protectionism is a dead-end road. consider appointing some outstanding your reassurance the most is Japan. alliance. This alliance is important not You know that technology and politically independent individuals to The Japanese are nervous about your only to the two contracting parties, but the relentless logic of comparative join your team. attitude towards the US-Japan security also to the peace and security of the advantage will force some industries alliance. They are worried about the entire Asia-Pacific region. and some manufacturers to relocate in ELECTION reliability of the US nuclear umbrella. order to survive. YOU NEED TO KNOW ASIA The trust of the Japanese government US-CHINA Instead of trying to protect jobs in We do. RHETORIC IS and people in the US is at stake. such sunset industries, you should focus NOT POLICY This is happening at a time of rising RELATIONS on promoting jobs in sunrise industries. My second piece of advice is to nationalism in Japan. A new generation Another country in Asia that needs Instead of erecting walls against disregard your election rhetoric in the of Japanese leaders are beginning to your urgent attention is China. In foreign competition, you should focus making of policy. In the course of the express the view that the time has come the course of the campaign, you said on incentivising sunrise industries to Get your complimentary 2-WEEK full digital access to The Straits Times long campaign, you made remarks that for Japan to transcend the US-inspired some unkind things about China. You locate in these depressed areas of your ONLINE / SMARTPHONE / TABLET resonated with the audience or your peace Constitution and to amend Article threatened to withdraw from the World country, to reskill the workers who have constituency but which would make bad 9 of the Constitution. Trade Organisation (WTO) and impose been laid off and to provide a cushion Simply go to readsph.sg/STAR policy. You should avoid the trap of being This process will be accelerated if tariffs on Chinese exports to the US. to support them in the transition. Receive full coverage of “Breaking News” on your mobile or tablet Get Push Notifications based on keywords you select 14 Get access to the 7-day archive of past ST issues. 15 Thinking Aloud Thinking Aloud

tion in the way people are prepared for Warren Fernandez World of new work and for fulfilling their potential, Editor-in-Chief possibilities said the DPM. First, a new balance has to be struck Evidence of these new technologies between the practical and theoretical in coming rapidly on stream was seen education programmes. throughout the massive WEF conference Davos to Daytona: A shift is also needed away from hall, from a South Korean robot called the front-loading of education during Hubo showing off its dexterity in the first two decades of a person’s life navigating obstacles in its path, to towards a system of lifelong learning. virtual-reality documentaries and an Public funds, and private savings, which Rediscovering the exhibition called This Time Tomorrow A South Korean robot called Hubo, seen here tend to be focused on education in these which showcased futuristic products, early years, should be spread out over such as clothes with solar panels to showing its dexterity at the World Economic Forum held in Davos, Switzerland, from Jan a longer period of a worker’s lifetime, charge your mobile phone. 20 to 23, is proof of new technologies coming enabling him to continually retool for case for globalisation It seemed like a world of rich new rapidly on stream. PHOTO: BLOOMBERG new jobs as technologies change. possibilities. To be more effective, education Indeed, one speaker at the forum, three great evils – boredom, vice and institutions should do better at Davos elite will Oxford professor of globalisation and need”. Already, signs of all three are measuring outcomes, ensuring that development Ian Goldin, likened the evident in some societies, they note. they are preparing their young charges have to find ways to present time to the Renaissance, with Unemployment levels are high in many for the jobs that are coming on stream. convince Trump and its flourishing of science, innovation, developed countries, including among Getting employers and unions the arts and ideas by the likes of young people. more involved in shaping curricula his supporters that Michelangelo and Leonardo da Vinci. Yet, paradoxically, employers and programmes would also ensure their future lies with Such periods of intellectual ferment, speaking on a panel on the Future of that education programmes are agile added Professor Patrick McCray, Jobs were united in lamenting how and stay relevant amid rapid changes the open, inclusive, professor of history at the University difficult it was to find, and hold on to, in technology. of California, often result in upheavals the skilled workers they needed. These steps are precisely what the forward-looking in society, with new social systems and Employers pointed to a double Singapore Government has embarked international order operating standards emerging, from mismatch – skilled workers were not on with its new SkillsFuture programme, education to religion and social welfare. where the jobs were; they were reluctant he added. Indeed, the sheer scale and pace or unable to move, with national borders, Rejecting the talk of a robotised of change are proving bewildering to cultural differences or xenophobic future world plagued with massive hen world leaders many, as United States Vice-President gather for their attitudes acting as barriers. unemployment, he said: “Technology Joe Biden pointed out. He reminded Secondly, workers who were available annual conference in will not determine the future. It is we those gathered at the forum that there did not have the skills that employers the Alpine resort of who will make the future. The question are very real middle-class fears of jobs sought. Davos in Switzerland is how we adapt.” being lost, livelihoods being disrupted Just about everyone who spoke at the Win January, the elephant in the room will Sharing this view, Prof Schwab and communities being shattered. session agreed that the main reason for summed up the current situation as be none other than Mr Donald Trump. A WEF report released just days this was outmoded education systems a moment of “great promise, but also Mr Trump is unlikely to be there in BT ILLUSTRATION: SIMON ANG before the forum warned that as many in most countries. great peril”. person; the United States President-elect as seven million jobs in developed Given the dramatic events of the past will be in Washington DC, busy being countries could be lost over the next “The sense that old certainties are Industrial Revolution, as spelt out by months, Prof Schwab’s remarks seem sworn in on Jan 20. That is the very five years, with only two million new A period of crumbling has rocked America’s allies, Professor Klaus Schwab, the WEF’s prescient, as were those who alluded week that government and corporate ones created over the same period. promise and peril to great social upheaval, intellectual chiefs will be holding their meetings The fear that globalisation has fallen founder and executive chairman, in The “Uberisation” of the economy flat has whipsawed markets. Although his latest book. Taking up these issues, Singapore’s ferment and change that would be in Davos, which are seen by some as might threaten cabbies’ livelihoods, brought on by the economic and the ultimate celebration for the idea of, post-Brexit Britons know what that feels “The First Industrial Revolution used Deputy Prime Minister Tharman as private drivers offer cheap and Shanmugaratnam pointed to two major social forces underpinning the Fourth and belief in, economic and political like, the referendum in Britain will be water and steam power to mechanise convenient rides to passengers. challenges arising from the Fourth Industrial Revolution. globalisation. eclipsed by the consequences of this production. But even those private drivers might Industrial Revolution. Yet, clearly, the anguished cries of A rather frosty reception might have election. Mr Trump has demolished a “The Second used electric power to be made redundant when an Uber of those who are at the receiving end of the consensus. The question is now what create mass production. “First, that it could destroy jobs, and awaited Mr Trump had he chosen to the not-too-distant future starts offering does not create enough new jobs… That wrenching changes it has given rise to – brave the journey to the picturesque ski takes its place.” “The Third used electronics and rides in driverless vehicles. rising income inequality, unemployment Perhaps most troubling for the Davos information technology to automate is a valid fear, as it could happen that town, several hours by road from Zurich. Then what? way,” he noted. and social dislocation – have not been Few, after all, have done more than he set will be the fact that so few from this production. Going by the discussion in Davos, sufficiently heard, or addressed, to elite circle saw what has been called “Now a Fourth Industrial Revolution But what had to be feared even has to dispute, disparage and even try you might point to two distinct camps more, he argued, was the status quo. ensure that the benefits of globalisation a “whitelash by the Trumpentariat” is building on the Third, the digital to debunk the Davos creed, with his on what one might make of the prospect This was one of high unemployment are spread more widely. coming. revolution that has been occurring since rejection of free trade, immigration, of a world without work. in many countries, coupled with jobs So, when they meet again in Davos racial integration, Western-led alliances Indeed, most of those who attended the middle of the last century. The “techno-optimists” cite the going unfilled because of a mismatch in January, the key architects – and and political liberalism. the annual conference convened by “It is characterised by a fusion of rather glib mantra of science fiction between skills and jobs. Wages had also primary beneficiaries – of globalisation The Economist magazine, favoured the World Economic Forum (WEF) in technologies that is blurring the lines writer Arthur C. Clarke, that the “goal stagnated for the middle classes, such will have much collective soul-searching by the Davos set, summed it up well in 2016 had given scarcely any credence between the physical, digital and of the future is full unemployment, so that the current situation holds little to do. They will have to ponder the rage an editorial after the shock US election to either the notion that Britain might biological spheres. we can play”. promise for many ordinary folk. and resentment that have surfaced from results: “The fact of Mr Trump’s victory pull out of the European Union, or “The speed of current breakthroughs New and more meaningful forms “We should fear the failure of the those who feel left out, ignored and and the way it came about are hammer that a 70-year-old businessman with has no historical precedent. When of human activity and social support Fourth Industrial Revolution, that it fails condescended to. blows both to the norms that underpin no political experience might storm his compared with previous industrial networks will spring up in this brave to uplift productivity, because you can The Davos elite will have to find politics in the United States and also way into the White House on a wave of revolutions, the Fourth is developing new world, just as it happened in the only raise wages on a sustained basis if answers, and frame solutions, to America’s role as the world’s pre- populist rage. It just wouldn’t happen, at an exponential rate rather than a previous industrial revolutions. you go for higher levels of productivity,” convince Mr Trump and his supporters eminent power… he has taken aim at said many. linear pace. Just imagine, this group says, robots he argued. from Detroit to Daytona that their the belief, embraced by every post-war Rather, much of the discussion was “Moreover, it is disrupting almost that can not only take away the drudgery “The challenge is to prepare people future lies with the open, inclusive, president, that America gains from the focused instead on the impact of rapid every industry in every country. And of office work, but also look after Ebola for this new world, where you already forward-looking international order often thankless task of being the global advances in fields such as 3D printing, the breadth and depth of these changes patients or handle nuclear waste. have many jobs unfilled, to prepare that has enabled the world to make so hegemon. If Mr Trump now disengages artificial intelligence, nanotechnology, herald the transformation of entire The opposing camp’s rejoinder them for these jobs, and the jobs that much progress in recent decades. from the world, who knows what will robotics and the Internet of Things. systems of production, management is from French philosopher Voltaire, are coming as well.” storm through the breach? These were giving rise to the Fourth and governance,” wrote Prof Schwab. who argued that “work banishes Doing so would require a reorienta- [email protected]  16 17 Looking Ahead Looking Ahead

Crown Prince Maha Vajiralongkorn, 64, is the designated successor to Thai king 2017 – A year of disruptions? Bhumibol Adulyadej but his coronation is expected to take place only after the royal cremation, in a year’s time. The king’s Read more here death has raised questions about whether www.straitstimes.com ASIA Thailand’s military rulers will proceed with the general election scheduled for Recommendations of the Committee on the Future Economy, late 2017. The Obama presidency: which is mapping a blueprint for Singapore’s economic future, An assessment are expected to be out in January 2017. One unknown is whether his rebalancing to Asia will endure China heads into leadership transition with most of its beyond his administration. top leaders due to retire in 2017. It is almost certain A six-member The election for that President Xi Jinping will be appointed for a second http://str.sg/4GAZ panel set up to Hong Kong’s term during the 19th party congress in autumn 2017. review various Chief Executive But many will be waiting to see if he gives any indication aspects of is scheduled for about his likely successor. He is expected to step down the possible March 26, 2017. in 2022 but some say a third term for the Chinese leader abdication of The position is cannot be ruled out. Japan’s Emperor currently held Akihito is by Mr Leung Tommy Koh expected to Chun Ying and announce its he is expected ELSEWHERE to contest for Jakarta’s gubernatorial election is due to be held on recommendations Choosing between another term. Feb 15, 2017. Governor Basuki Tjahaja Purnama, better by early 2017. The year begins with America and China known by his nickname Ahok, is the front runner. the inauguration of the The current US policy in Asia He is a strong ally of President Joko Widodo. The other next US President on is flawed and offers little hope Jan 20, 2017. It will two contenders are: former president Susilo Bambang of stable ties with China in this Yudhoyono’s son Agus Harimurti Yudhoyono; and take place on the West Mr Anies Baswedan, who is supported by the party Lawn of the United part of the world. of former Suharto-era general Prabowo Subianto. States Capitol Building in Washington. http://str.sg/4NGe Mr Prabowo lost to Mr Joko in the 2014 presidential France is due to election. hold its presidential election in April- May 2017. There are already 12 declared Malaysia needs to hold its next candidates and general election only by August 2018. President Francois Hugh White But speculation is gaining ground Hollande is expected that it could call for elections any On Aug 8, 2017, Asean celebrates 50 years since its to contest for a time after March 2017. The nation founding. The 10-member grouping will be led by second term. Philippine President Rodrigo Duterte as chairman. will be celebrating its 60th year of The rise of China and independence on Aug 31, 2017. The theme for the Philippines’ Asean chairmanship in 2017 is Partnering For Change, Engaging The World. the fall of democracy The twin trends of the 21st The future of Brexit will be in the limelight. British Prime Minister Theresa May hopes to century are the rise of China South Korean President Park Geun Hye start the process of formal discussions with the and the decline of democracy. faces record low approval ratings and European Union for Britain to leave the EU – by Different though they may be, mass protests calling for her resignation triggering Article 50 of the Lisbon treaty – by there is one thing in common: and questioning from prosecutors, amid a March 2017 and bring it to completion in two Both China and democracies political scandal involving her close friend, years. However, much will depend on the UK Supreme Court’s ruling on her ability to do so, grapple with a deficit of trust Ms Choi Soon-Sil. The next presidential from their citizens. elections are due to take place in after a High Court decision in November held that Federal elections are December 2017 but if she is forced Parliament should vote on the issue. The Supreme set to take place in Court hearing begins in December 2016. http://str.sg/4gxk to step down, it could be held earlier. Germany in autumn 2017. Chancellor Japan’s Iwakuni India is due to appoint Angela Merkel is military base is set expected to run for its next president in Iran is set to hold Singapore is due to elect its next to become the first July 2017 after the another term and foreign base of the its presidential observers will be President by August 2017. It will be term of President election in the first election following changes United States to Pranab Mukherjee watching out for the May 2017 and fate of the anti-Islam, proposed by the Constitutional receive the state- ends. The ruling Jean-Pierre of-the-art F-35 jets. President Hassan anti-immigrant party, Lehmann Commission set up to review the Bharatiya Janata Rouhani will The first batch of 10 the Alternative fur elected presidency system. Prime Party is expected to seek a second planes is due to arrive Deutschland (AfD), Minister Lee Hsien Loong has said try to make history term. If he wins, which has made in January while six Sources: The Straits Times, Bloomberg that the election will be reserved by getting one of its it will give him a impressive gains in more will arrive in Business Week, Financial Times, Economic for candidates from the Malay community. This means leaders appointed to chance to push regional elections August 2017. Times, Japan Times, Time. Singapore will see its first Malay president after 47 years. the position. through reforms. since 2013. PHOTOS: REUTERS , AFP, EPA, ST FILE

18 19 World Watch World Watch

Jonathan Eyal Europe Correspondent, The Straits Times in. But, as Mrs May has pointed out, the Nor is it clear that forcing companies reasons for the rejection of the EU by to shoulder more of their corporate the British people are more profound social responsibilities achieves the and systemic. necessary results. Germany, which has Can Theresa May’s idea applied this model for decades, recently GLOBALISATION’S modified it precisely because it resulted BACKLASH in higher production costs without higher benefits to the community. For Brexit is a product of a sense of of ‘the good government And reducing immigration without resentment against the political elites improving education and social inclusion who not merely fail to understand what will not achieve much either, especially ordinary people want, but also actually in an age when companies may either have a disdain for the electorate’s beliefs. can do’ tame the market? choose to invest in automation instead As Mrs May put it in what must rank as one of the most searing criticisms of her of hiring domestic labourers, or simply country’s elites, they regard love of the opt to relocate production lines to other Once dismissed nation and patriotism as “distasteful”, countries. they dismiss fears about immigration as Furthermore, as Mrs May is now as parochial and merely “parochial”, and they dismiss doing, trying to take the sting out of inconvenient by the voters’ concerns about job security as populist anti-immigration movements just an “inconvenient” problem which by threatening draconian immigration elites, concerns about in no way should interfere with free controls will not work either. French politicians have adopted this technique immigration and job trade and globalisation. British Prime Minister Theresa May’s proposed And there is no question that Mrs policies are being discussed in many European for years, but have always been trumped security now have the May has captured the feelings of a capitals. PHOTO: BLOOMBERG by extremists such as France’s National ear of political leaders majority of her nation. For, if one sits markets are dysfunctional, we should Front, who simply advance even more in London or some of the country’s be prepared to intervene”, she says. irresponsible demands. all over the world – other big cities, life has never felt better, She has proposed to force companies And there is also the risk that, in their British PM Theresa restaurants have never been more to reveal the salaries that they pay their rush to appear responsive, politicians tempting, and there has never been a top bosses in order to shame them into like Mrs May read too much into the May being the latest better time to hire cheap foreign maids dealing with workers’ inequality, impose perceived current backlash against and cleaners, or buy an array of foreign- border controls to reduce immigration to globalisation. produced goods, all pouring into the the bare minimum and force companies Extensive polling recently released country duty-free. to exercise corporate responsibility in by the Chicago Council on Global ONDON - “Brexit means But to millions of Britons who their society by hiring and training Affairs, a US think-tank, indicates that Brexit” is what Mrs Theresa have only basic education and no workers, all in order to shift the market two in three Americans still believe May vowed to her people ST ILLUSTRATION: MANNY FRANCISCO skills, globalisation spells permanent balance “decisively in favour of ordinary that globalisation is “mostly good” when she became Britain’s marginalisation and poverty. Few British working-class people”. for the US and a majority still support Prime Minister in July. companies now bother to train British And there is no doubt that although the Trans-Pacific Partnership, the trade LThat was her way of promising that, concerned with wealth distribution. in the British nation. In some parts of workers – why should they, when they Britain’s proposed measures to stop agreement which both Mr Trump and having voted in a referendum to exit If carried through, this will be London, such as the leafy northern can import trained workers from the rest immigration are unusual by European Mrs Clinton now reject. the European Union (EU), British an intellectual shift of monumental suburb of Islington or the super- of Europe? Some companies do not even standards, Mrs May’s proposed policies In short, voters may not be as voters were going to get precisely that proportions, and it is one that appears expensive areas of Kensington and attempt to hire workers in Britain at all. are now being discussed in many – nothing more and nothing less than to be echoed in many other Western Chelsea, more than two-thirds of the disenchanted with the current system They simply use labour intermediaries European capitals. as their occasional outbursts indicate. a departure from the EU. countries, including the United States. electorate voted for Britain to stay in the who ship in busloads of EU workers, French leaders gearing up for their But as Mrs May addressed the annual The days of untrammelled capitalism EU. But most of England’s countryside So politicians who react by threatening no questions asked. A decade ago, an country’s presidential election next conference of her ruling Conservative unleashed by then US President Ronald voted “no”, and in some industrial parts trade and immigration barriers may be unskilled British worker had to compete April talk about this all the time. So do Party in the week of Oct 3, 2016, it Reagan and then British Prime Minister of north England, rejection of the EU exaggerating by proposing to use a in a British labour market of 60 million German politicians preparing for their suddenly became clear that Brexit Margaret Thatcher during the 1980s now surpassed 70 per cent. hammer to crack an egg. people. Today, he is asked to compete general election in October 2017. And actually means more than just Brexit: appear to be over. An even more significant factor was Still, there is no doubt that the in an EU labour market of more than so do Mr Donald Trump and Mrs Hillary It heralds the start of a broader Undoubtedly, the British referendum the turnout in the EU referendum. In intellectual mood in many Western 500 million. Clinton in the US. All are suddenly “revolution”, one in which, as she put that resulted in the country’s decision big cities, the turnout was respectable countries is now changing, moving away Seen from this perspective, the only downplaying the virtues of markets and it, millions of Brits “stood up and said to depart from the EU was a seminal, but unremarkable. But in northern areas from a belief in the “self-correcting” surprise is that the backlash against globalisation, while extolling the benefits they were not prepared to be ignored historic event. It was a result nobody of England where hostility to the EU is virtues of markets and more towards globalisation has taken so long to of government regulation. any more”. expected, certainly not the government intense, the turnout was as high as 75 government regulation. As she made clear to her party ministers who hoped that the per cent to 80 per cent of the electorate; manifest itself. But there is no question But it is not at all clear that they are what this backlash is all about: It is right to do so. To start with, the evidence Nor is there any doubt who will end stalwarts, the British leader plans to ride referendum would settle the question people were angry and determined to up paying the price if this experiment on the wave of this revolution by shifting of Britain staying in the EU for at least a show their anger. against immigration and open borders, that government officials are necessarily goes wrong, as it has many times in the her party from the centre-right to the generation, and not the broader British Fervent believers in European as well as unfettered free trade, which, better than markets at allocating past: the same “ordinary working-class centre-left of politics, from a blind belief political class who tended to dismiss unity are still in denial about what instead of being seen as a wealth creator, resources and alleviating economic in the forces of the market economy, free those who argued that Britain could has happened. They tend to dismiss is now regarded as a job destroyer. problems is patchy, to say the least. people” on whose behalf Mrs May now trade and globalisation towards a world exist outside the EU as lunatics, no the British referendum as just a fluke, Mrs May wants to take the lead in The worst decades in British economic wishes to act. in which markets are again regulated, different from flat-earth believers. an example of British eccentricity, the answering this backlash by reminding history during the 20th century were borders are increasingly sealed to The fact that the decision went the sort of foolish things people who live voters of “the good government can do” precisely those when the economy was migrants and governments are again other way created a fundamental split on islands off continents tend to engage in saving capitalism from itself – “where regulated by the state. [email protected] 

20 21 Perspective

cause now to be “filled with uncertainty, YOU NEED TO KNOW ASIA unease and strife” than during the Cold War years. Yet these are the sentiments Stand up for the stirred up by anti-trade politicians with an eye on the polls in many countries. Such actions represent a flaw of the democratic system as national policy can benefits of trade wind up being skewed by the interests of a certain group of voters. Low-skilled hat is good to win elections closely during the American presidential workers are most certainly vulnerable – not is not always good for elections. That is probably why both just because of competition from abroad a nation. That often Democrat Hillary Clinton and Republican but also from smart machines and software. We do. Wunspoken truth has been Donald Trump contributed to “the rawest But protecting them by putting up walls, apparent in America of late. It showed debate in decades over trade agreements”, rather than training them, has wider effects up in the shortsighted views that surfaced as the Wall Street Journal observed. that can harm other groups as well. Quite in an excruciating presidential race that got apart from limiting the range of goods many hoping that both candidates would Putting a price to the harm and the availability of cheaper prices, lose in tandem. Unfortunately, as was seen caused by trade barriers, protectionism can work its way through in their teeth-gnashing exchanges, the two the Organisation for an economy like an unstoppable cancer. contenders thought that trash talking Economic Cooperation and Putting a price to the harm caused globalisation was good for their election by trade barriers, the Organisation for campaigns. Even more regrettably, they Development says a rise of Economic Cooperation and Development could be right. US$1 in tariff revenues can says a rise of US$1 in tariff revenues can A study done at the National Bureau lead to a US$2.16 fall in world lead to a US$2.16 fall in world exports of Economic Research earlier in 2016 exports and a US$0.73 drop and a US$0.73 drop in world income. showed that speaking against free-trade in world income. On the flip side, opening up trade agreements when low-skill jobs are under would help grow average real incomes threat translates into demonstrable vote With the political stakes high, it’s no in both developing and newly-emerging gains. If either candidate speaks like an wonder that it took outgoing President countries, with the latter seeing higher adult on the truth about globalisation, Barack Obama to make the case for gains of 3 to 6 per cent of GDP. Sadly, all could be lost – especially when there globalisation in his final address to the though, politicians who are more focused are large numbers of endangered workers United Nations General Assembly, where on short-term electoral gains think they in the usual swing states who watched he reminded the world that there is less can ill afford to take the long view. 

So much is riding on the superpower’s leadership that a drastic change of When disruption course would mean reassessments by many countries that could play out in a number of uncomfortable ways and for trumps old order an uncomfortably long period. If it is no longer possible to count on a dependable ally and an old predictable order, what any countries once fretted and how do they want their nation to act then can one fall back on? over how the United States in an uncertain world? That is a matter What the election results reveal is views the rest of the world. As of considerable importance for Asia too, just how sharply disruption has affected Mthe sole pre-eminent power in especially in the light of geostrategic American politics – more profoundly than the post-Cold War era, that mattered. But what Brexit is doing to Britain and how nations got more concerned about how So much is riding on the President Rodrigo Duterte is overturning Americans see themselves, as the nastiest superpower’s leadership that Manila’s oligarchic establishment. Political ever race to the White House unfolded a drastic change of course dynasty, experience in office, time- over an exceedingly long year. It seems like would mean reassessments honoured ideals, the weight of facts Get your complimentary 2-WEEK another epoch altogether when Senator by many countries that and institutions, a superior war chest, full digital access to The Straits Times Ted Cruz became the first Republican could play out in a number party orthodoxy, and even a battery of candidate to throw his hat into the ring in of uncomfortable ways and big political names, pollsters and rock March 2015. He was described as “easily stars seem to matter less in the age of ONLINE the most hated man in Washington”. But for an uncomfortably long disruption, it seems. Even if this is seen that was before Mr Donald Trump gave period. If it is no longer as a freak result with two unpopular SMARTPHONE him a run for his money by raising the possible to count on a candidates acting as the perfect foil for political stakes to an unimagined height. dependable ally and an old each other’s warts and beauty spots, Mrs Hillary Clinton, and the political order predictable order, what then there is no denying that the majority of TABLET she represented, was then riding higher on can one fall back on? Americans identified themselves more the poll charts. She remained on top (by with Mr Trump. This was despite the just a whisker later) all the way till the repositioning that is already taking place fact that some of his positions on trade, readsph.sg/STAR results started emerging. It showed how in the region. America has been the great immigrants and foreign affairs spooked Simply go to few could read American voters accurately. internationalist for decades under both many around the world. Mr Trump struck a The eventual victory of Mr Trump and Democrat and Republican presidents. Is gracious, statesmanlike note in his victory the Republicans stunned global capitals that self-perception destined to run smack speech. The world will be watching to see and markets. What was on the minds of into a wall that has become a metaphor for if he surprises again when he gets to the Receive full coverage of “Breaking News” on your mobile or tablet. Americans when they went to the polls Mr Trump’s “America First” worldview? White House.  Get Push Notifications based on keywords you select. Get access to the 7-day archive of past ST issues. 22 On Our Radar On Our Radar

Goh Sui Noi general secretary and state premier, establishing the legacy of the CCP and East Asia Editor, The Straits Times new appointments to the PSC have re-establishing China as a world power. to be drawn from regular members Another more personal reason is that of the Politburo who are not due for in his anti-graft drive, he has made many retirement. enemies and will not want to retire until The third is that from the pool he can be sure of putting a successor in of eligible Politburo members, place whom he can trust, said Professor Will Xi go for a third term? appointments to the standing committee Huang. are made on the basis of age. To these Mr Xi’s consolidation of power and might be added a fourth, of a two-term even his staying for a third term is not limit for PSC members. necessarily a bad thing, say analysts like All eyes on Chinese Dr Miller wrote that the rules may Prof Huang. President to see how be to prevent the “all-out free-for-all At this juncture of China’s competition for power that plagued the development, a strong leader is needed- he will consolidate his later Mao Zedong and early post-Mao and Mr Xi has shown himself to be power in November years”. Those were some of the most one – whether it be pushing economic turbulent years of the communist era. and political reforms amid a slowing 2017 and beyond Also, taken together, the rules economy or managing China’s relations “broadly respect experience and merit with the rest of the world, including the over narrower calculations of factional United States, wary of its rise. and personal politics, and so prioritise But another China expert, Professor eijing is on tenterhooks and criteria essential to managing a country Andrew Nathan of Columbia University, will be so for most of 2017 whose power and prosperity have wrote: “Xi’s concentration of power as the elite politicians of grown, and whose stake in orderly and poses great dangers for China.” Asia’s most powerful nation stable politics has grown accordingly”. He quoted Deng Xiaoping in a speech jostle for power in a year of the patriarch gave in 1980: “Over- Bleadership transition. What is certain is that concentration of power is liable to give Five of the country’s seven most major reforms are unlikely rise to arbitrary rule by individuals at powerful leaders – members of the in a year of leadership the expense of collective leadership… apex Politburo Standing Committee transition, although There is a limit to anyone’s knowledge, (PSC) – will have to step down at the experience and energy. If a person holds 19th National Congress of the Chinese Beijing will likely try to too many posts at the same time, he will Communist Party (CCP), likely to take manage the economic find it difficult to come to grips with place in November 2017, if a set of Chinese President Xi Jinping at a meeting in Beijing. PHOTO: AFP slowdown to prevent any the problems in his work and, more unwritten rules are followed. drastic fall in growth. In important, he will block the way for In their place, President Xi Jinping, Still, while this showed consolidation term in 2022 – for a myriad of reasons other more suitable comrades to take also the general secretary of the party, foreign policy terms, it will of power by Mr Xi ahead of the 19th – breaking the rule of a two-term limit up leading posts.” is expected to slot in his own people, want to keep the region party congress, that he needed to be for PSC members. ST ILLUSTRATION: ADAM LEE Whether Mr Xi will go for a third further consolidating his already peaceful and stable and is, formally named “core” leader could If Mr Xi does break any of the term may become apparent in 2017 – if considerable power, seen by some to mean a certain amount of resistance unwritten rules, he will be undoing therefore, unlikely to make he fails to name a successor then, it is be surpassed, since the communists to his leadership among vested interest the painstaking institutionalisation drastic moves. highly likely he will do so. came to power in 1949, only by the groups affected by his policies – such of the leadership succession process princelings like Mr Xi – are seen to be But whether that is a bridge too far late strongman Mao Zedong. as anti-corruption and reduction of begun by Deng Xiaoping in the 1980s Still, there are other China experts part of the President’s inner circle. Of for him, only time will tell. Mr Xi, in the four years since overcapacity – that needs to be overcome. to emphasise collective leadership and who believe that Mr Xi might tinker with the two, Mr Wang is seen as Mr Xi’s most What is certain is that major reforms assuming leadership of the party in When Deng Xiaoping in 1989 prevent anyone from becoming too or break some of the rules, for several effective ally, helping him to consolidate are unlikely in a year of leadership November 2012, has concentrated designated Mr Jiang the core leader – powerful. reasons, to put his own men in place power and implement his new policy transition, although Beijing will likely power in his hands by heading key the very first time the term appeared and even to go for a third term himself. initiatives. try to manage the economic slowdown “leading small groups” that guide – together with himself and Mao RULES GOVERNING One of these is that Mr Xi has not been Perhaps because of this, there is the to prevent any drastic fall in growth. policies and reforms and sidelining Zedong, it was to shore up support for able to have as free a hand as he would speculation that Mr Xi will attempt to In foreign policy terms, it will want many of the PSC members. Mr Jiang. This was because Mr Jiang APPOINTMENT have liked because several members of keep Mr Wang on the PSC in 2017, to keep the region peaceful and stable But not all are convinced that Mr was an outsider from Shanghai – where In a recent article, China-watcher the PSC are not of his choice. despite this contravening the age-limit and is, therefore, unlikely to make Xi is in full control or that his power is he was party chief – brought in to head Alice Miller of the Hoover Institution At the 18th party congress power rule. drastic moves such as announcing an as great as it seems, with reason. When the party after the purging of then party at Stanford University described the transfer where Mr Xi took over the reins Air Defence Identification Zone in a speech made by Mr Xi in January general secretary Zhao Ziyang. three rules governing appointment of the party, compromise was made so THE THIRD TERM the South China Sea unless provoked. against “cabals and cliques” in the So Mr Xi’s ability to name his own to the PSC and concluded that Mr that five of the PSC members would China, under Mr Xi, has been CCP appeared only in May – and then people to the PSC – at least three of Xi would “continue to act within the serve only one term because they will INCENTIVE increasingly assertive in its claims in only extracts of it – it was suggested the five seats in order to control the constraints of institutionalised collective be 68 or over by 2017. Three of them are As for Mr Xi going for a third term, the vital waterway. that members of the PSC belonging to party’s top decision-making body – will leadership”, mainly because he lacked said to be part of the Shanghai faction China expert Huang Jing of the Lee However, how China behaves in the the Shanghai faction had resisted its be closely watched as another indicator the “surpassing” power to break out of former president Jiang Zemin. Kuan Yew School of Public Policy region also depends on its relationship publication. of the extent of his power. of them. Premier Li Keqiang, 61 – the only thinks “there is strong incentive” for with its rival the US, which would have The attempt to characterise Mr Xi as And as the party prepares for the According to Dr Miller, these three one, apart from Mr Xi himself, eligible the President to do so. a new president with a new Asia policy, the “core” of the CCP – a term used leadership transition, rumours have rules were followed over the past two to serve a second term because of his First of all, with his hands somewhat as well as how its neighbours behave. to describe then President Jiang Zemin been flying thick and fast that Mr Xi decades, and the first is that retirement age – is part of the Communist Youth tied in the first five years, he will only For the region, 2017 will be a year but not Mr Xi’s immediate predecessor might break some rules, including of both standing committee and regular League, the faction of former president have the next five after the 19th party to watch and wait, to keep a low profile, Hu Jintao – began in January, but did keeping his anti-corruption czar Wang members of the Politburo “has followed Hu Jintao. congress to have a relatively free and to prepare for what will come for not gain much traction. However, Qishan, who will be over the age limit a defined age limit”, set at 68 in 2002. Only Vice-Premier Wang Qishan, 68, hand to put the country firmly on the next five years. his supporters at the sixth plenum in of 68 at the 19th congress. The second rule is that, apart from and Mr Yu Zhengsheng, 71, chairman of the path towards his vision of China’s October tried successfully to have Mr There is even speculation that Mr Xi younger leaders appointed to the PSC top advisory body the Chinese People’s rejuvenation, reunification with Taiwan, Xi formally named as the “core” leader. himself will want to stay on for a third in preparation for succession as party Political Consultative Conference – both escaping the middle-income trap, [email protected] 

24 25 Regional Watch Regional Watch

COST OF HIGH-SPEED RAIL Shannon Teoh Singapore to KL: Getting up to speed • Estimated: Expected RM50 billion (S$15.7 billion) Malaysia Bureau Chief, The Straits Times The dream of zipping from Singapore to Kuala Lumpur in 90 minutes However, one rail way expert said it could range has been progressing steadily. Here are some highlights. from £15 million to £40 million (S$30 million to S$80 million) per km, depending on the complexity SELANGOR of construction. Going by a distance of 350km, this could mean a range of $10.2 billion to $27.2 billion. Kuala Lumpur COMPLETION DATE Kluang: Sleepy town slowly Putrajaya South China • Now set for 2026. NEGERI PAHANG Seremban SEMBILAN Sea • It will span 350km from KL to Singapore, with Kuala Lumpur stops in Putrajaya, Seremban, Ayer Keroh, Muar, International Batu Pahat and Iskandar Puteri. Airport • The Singapore stretch is 15km and mostly getting its groove back Port underground. The terminus station will be between two MRT stations, Jurong East and a new station Dickson MALAYSIA Ayer Keroh Muar along the Cross Island line. MALACCA JOHOR People rediscover TECHNOLOGY Preferred • Two to three times faster than normal railways, forgotten charms in Batu with operational speeds likely to be 320km/h in high-speed Strait of rail alignment Malacca Pahat Causeway Malaysia and 200km/h in Singapore. Travelling Kluang as attractions time between KL and Singapore is 90 minutes. new and old draw North-South • The trains will run on an overhead catenary Expressway system, powered by 25Kw AC power, with one pair Iskandar Puteri of tracks only, one track heading to KL and the in visitors KTM line Jurong East other to Singapore. INDONESIA Second Link SINGAPORE • Advanced signalling system to monitor train locations and prevent collisions. STRAITS TIMES GRAPHICS or most of the last century, • Each 10-car train will carry 800-1,000 people. nothing much changed in sleepy and laid-back Kluang, domestic product – racing ahead of state Uniqlo and even H&M, which had which was once Johor’s capital Johor Baru with an average of entered Malaysia only in 2012, to do Impact of High Speed second most prosperous RM22,294 (S$7,475) a person as of the same in 2015. Rail in Malaysia Ftown after the capital Johor Baru (JB). 2010 – a 21 per cent growth since 2000. “We see potential in Kluang in In the 1970s and 80s, Kluang seemed Johor Baru, sitting in the heart of terms of customer base as well as • Kuala Lumpur is poised to to have gone from being a key inland the federal government-driven Iskandar good business conditions and store become a leading global centre for port to a forgotten relic. The importance development corridor, has grown a location, among other factors, and we multinational corporations of its iconic railway station, which served relatively modest 14 per cent in the are extremely encouraged by how well • There are plans to develop a vast tracts of agricultural areas and same decade. received the brand is in Kluang,” said 1,000-acre (404.6 ha) TechValley several manufacturing hubs, diminished Kluang produces over a quarter of H&M spokesman Abby Wee, in an e-mail in Sendayan to attract SME in importance after Malaysia beefed up Kluang, about an hour’s drive from Johor Baru, produces over a quarter of Johor’s palm oil Johor’s palm oil output, is a ceramics from the retailer’s Singapore office. manufacturing and research its road and air transport system. output, and is a ceramics hub featuring two of Malaysia’s top tiling companies, Guocera and hub featuring two of Malaysia’s top More than 500 people queued up for investments MML. It is also home to a number of multinational firms, such as personal care giant Kimberly- tiling companies, Guocera and MML, Even today, Singaporeans often give Clark, German refrigerator maker Liebherr and French building materials firm Terreal. the store’s opening in Kluang. The mall • Malacca could attract more tourists the place a miss as they drive up on ST PHOTO: SHANNON TEOH and is also home to a number of now boasts 95 per cent occupancy, with and health tourists multinational firms, such as personal the North-South Expressway from JB a cineplex, bowling alley and what was Batu Pahat could become care giant Kimberly-Clark, German • to Malacca and other places further the only Starbucks in the area. the centre of design and refrigerator maker Liebherr and French north – despite Kluang being just an shops spills out down Jalan Sultanah. lots were ready, and right smack in the According to Kluang Mall’s 2013 manufacturing textile for Malaysia building materials firm Terreal. hour away from JB. It is the only town outside the state middle of the 1997 Asian financial crisis. customer survey, nearly a third of Over the last decade, the town’s old • EduCity at Nusajaya could This could all change by the time capitals and Klang Valley to boast global “I sold it all only in 2002 and had to weekend footfalls were those of visitors money has begun to create new money. become a regional education hub the Batu Pahat High-Speed Rail (HSR) fashion brands like Uniqlo, H&M and service hundreds of millions in loans for from outside the district. In the mid-2000s, local developer Source: The Star/Asia News Network station is up and running in about 10 Cotton On. the project. But I couldn’t abandon it So many tourists from near and far Majupadu built the Kluang Mall using years. The HSR station will be about Only the smell of freshly brewed because I had already paid the squatters have been flocking to Kluang that Mr coffee wafting out of the now famous a capital-intensive and higher-risk model half an hour away from both Batu Pahat in cash,” he said. Tan has had to divert demand from But for the 101-year-old town, these Kluang Rail Coffee franchise reminds of full ownership of the shopping centre and Kluang. Singaporean tour groups for his Prime are just baby steps. people of the past, when derelict and leasing space to tenants, instead of Even now, cash-rich residents of OPENING THE City Hotel – the district’s largest inn – to Both the Kluang Malaysian Chinese colonial buildings and squatters would selling lots off. This allowed Majupadu Association and Democratic Action Kluang – which means “bat” in Malay – other hotels that have come up in town. are buzzing over a steady transformation greet recent arrivals. FLOODGATES to control the tenant mix. Party have been pressing for recognition that has been taking root over the past “When I started my law firm in 1993, Since then, others have taken Mr But the project struggled in the of the town’s heritage. two decades, and reversing an outflow there was only one pub, and I was the Tan’s lead in reshaping the face of beginning, incurring losses with only KLUANG 2.0 In January, their efforts finally paid that previously kept the town in the only young professional there. But in the Kluang, and unleashing the pent-up 50 per cent occupancy. Another key attraction is the 40ha off, when an 8ha piece of land near doldrums. last 20 years, the landscape has changed purchasing power of the cash-rich But Majupadu executive director Tey Zenxin Organic Farm – Malaysia’s the railway station was gazetted by the It seems crazy that up to the mid- completely,” said the local Malaysian residents in the town, which has a Fui Kien was determined to succeed – largest – which features an organic federal government. The move paves the 1990s, 500 squatter homes sat right in Chinese Association chief Gan Ping population of 300,000. having ditched the bright lights of Kuala restaurant and grocer, walking and way for the revitalisation of forgotten front of the main transport hub, which Sieu, born and bred in Kluang. Many are businessmen and, Lumpur and a career in law to return bicycle tours, and a petting zoo. back lanes and historical sites. included the town bus stand, instead of It was a costly process for Mr Tan, according to third-generation Kluang home to Kluang. Executive director Tai Seng Yee said With the railway line set for an a lively business district. who is the managing director and Rail Coffee operator Barney Lim, their The turning point came more than there have been 500,000 visitors from upgrade to one that is electric and In 1990, Datuk Tan Seng Leong – founder of public-listed property self-employed status allows them the two years after the mall opened its doors. Singapore since the farm opened its dual-track, and the much-vaunted HSR now known as the “Father of Kluang” developer BCB Berhad. flexibility of having “tea-time” breaks, Padini, one of Malaysia’s biggest doors a decade ago. link from Singapore likely to include a – proposed that the third-generation He spent years in court as politicians which is now something that is practised apparel brands, decided to open its first The company returned to Kluang, station just 30km away, these separate occupants be relocated to what was then protested against the controversial plan. in an astonishing 500 kopitiams or store outside of the capital cities and the where it had other food businesses. developments could come together to Johor’s first private development project. In the end, he paid RM30,000 on coffee shops across town. Klang Valley in Kluang Mall. It opened up the farm to the public, make Kluang a new tourist hot spot. Step outside the railway station today behalf of the state government to each Kluang is Johor state’s richest This set the precedent for believing that if people understood the and a commercial hub with modern squatter, three years before the first shop district – in terms of per capita gross international brands like Cotton On, process, they would believe in the product. [email protected] 

26 27 Focus On Singapore Focus On Singapore

Woodlands Integrated Healthcare Campus from other industries with related skills in 2022. into your industry. The Committee on ‘To be a runway Each of them will need a few thousand healthcare workers, from doctors to nurses, COMMITTEE ON THE the Future Economy enrolled nurses, patient health assistants The Committee on the Future and allied health assistants. FUTURE ECONOMY Economy (CFE), established economy, we need (CFE) in 2015, has been tasked with SKILLS MISMATCH I’ll touch on three themes that I think charting new directions for the If you look at Singapore’s Job Bank are quite relevant and may be some of the Singapore economy. It is expected from MOM (Ministry of Manpower), these key thrusts of the CFE. to present its recommendations skills but we also early 2017. The committee, made are the three highest categories of job One is the runway – Singapore has a vacancies. (For) administrative support and runway economy. Two, the importance of up of a panel of business and service activities, about 40,000 vacancies skills. Three, the importance of innovation. government leaders chaired by are currently available. I was in NUS (National University of Finance Minister Heng Swee Keat, need ideas’ has zeroed in on five key areas: With so many vacancies out there, why Singapore) recently. is it that the PMEs cannot find jobs? One We had a dialogue where a student the digital economy, jobs and likely hypothesis is skills mismatch. was asking, with arts and social sciences skills for the future, Singapore as Today, vacancy-to-job seeker ratio has (degrees), can we find jobs when we a connected city, innovation, and Ong Ye Kung gone below one, whereas traditionally we graduate? And the data speaks for itself – 90 governance. have always been above one. Second, over per cent of them found jobs after six months. the years, the type of jobs has improved. Why is that so? Because we were a PHOTO: ST FILE We’ve got more PME-type jobs. PMEs control tower economy. we must be grounded on capabilities. all require some kind of specialised skills. So many big MNCs (multinational That is why MOE (Ministry of Education) Singapore is watching THE JOB MARKET GROWTH AREAS If the PMEs are unemployed, they need corporations) and big companies use is doing so much to develop applied skills. to acquire other specialised skills to find Singapore as their regional HQ. out for the report of I think more PMEs (professionals, FOR JOBS jobs, which makes them more susceptible And because of that, they need talents managers, executives) especially are getting CREATING JOBS FOR IDA (Infocomm Development Authority) to skills mismatch. That is one of the of all kind, because as a corporate HQ, the Committee on unemployed, finding difficulty to re-enter told The Straits Times that there were challenges today. you have finance, you have HR, you even THE FUTURE the Future Economy, the workforce and restart their career. And 150,000 technology professionals working I went to the Singapore Business have CSR (corporate social responsibility). To remain competitive, we must be then there is also concern about slower in Singapore and that 15,000 vacancies Federation to get a sense of what are the You can have planning, strategy prepared to venture out of our comfort which will set future job growth. could not be filled. Today, the IT industry skills currently required for the hospitality planning, scenario planning, all kinds of zone. Increasingly, companies are going to But the situation today is very different is still crying out for talent. sector. It needs competent supervisors function. And because of that, there is a put a premium on people who can work directions for the from 2008 when we had the Asian financial Precision engineering is part of the and managers with a strong sense of demand for all kinds of talent. overseas and live with those uncertainties. crisis. We could feel the tremendous job $4.5 billion government transformation responsibility, care and duty. But that’s not enough for the future. If we want to be a runway economy, country. Minister for losses at that time. programme, and from now to 2020, it For the financial services sector, Beyond control tower, we also have to be we need skills but we also need ideas – Education (Higher Despite the tremendous numbers of is estimated that it needs another few emerging and evolving skills include IT the runway. ideas different from what our competitors retrenchment, we had a big emerging thousand engineers. application knowledge and cyber-security The runway of an airport is where all the can come up with, which is why the third Education and Skills) sector, which is the IRs (integrated resorts). Railway: We are expanding our MRT analytics. On top of that, they are also logistics, the air crew... everything comes important factor is still innovation. Today we don’t have that kind of big lines. The Land Transport Authority and looking at very strong numeric skills. together and then the plane can take off. Today, Singapore’s R&D is right up Ong Ye Kung shared hiring sector, but there are still jobs. The industry estimated we are short of 1,000 Employees need to be multi-skilled. And likewise, in terms of an economy, there on the world’s radar screen, but his view on a few jobs are scattered all over the place. rail engineers. we have to be the place where ideas are what we really need to deliver is to make One clear evidence is graduate Banks: DBS, Citibank combined have RETRAIN AND conceived, business plans are developed, sure that much of this research translates related issues at a employment outcomes – and they are 1,200 vacancies, most of them in IT as well resources are put together and from here, into intellectual property, and then into still bright. as compliance. Adding to the other banks, RE-SKILL products and services can be launched to commercial outcomes, jobs, companies forum organised by Based on our latest Graduate Employment there are even more vacancies. We have to encourage workers to retrain the region or to the world and we can take and business ideas that can take off from The Straits Times. Survey, nine in 10 fresh graduates from our Healthcare is still very healthy. We have and re-skill themselves to find new jobs. off from Singapore. Singapore. autonomous universities and polytechnics two big hospitals coming up – Sengkang Employers or HR (human resources) too First, skills will be different because Another one is regulatory sandboxes. Here are excerpts: still find jobs within six months. General and Community Hospitals in 2018, must be more flexible in hiring practices. you’re no longer just controlling, monitoring Innovation by its nature is something new... If organisations still hire based on and managing things. You need skills that and as regulators, our tendency when we academic results, then it’s not fair to the are practical and applied in nature. If you see something we’ve never seen before is applicant. If organisations still hire people have to make things happen, you have to to say you cannot do (it). Taking the next step, again based on (their) years of experience in the be a bit more gung-ho. But we really need to inculcate in all relevant industry, then I think you have The second theme is SkillsFuture. It will regulators that when you see something Singapore’s economic profile has changed significantly over the last 50 years, thanks to a series of growth condemned yourself never to grow. continue to be a key feature of the CFE, you have not seen before, always try your strategies designed to keep the country competitive. Here’s a look back on five decades of transformation, You have to be able to attract people because if we want to be a runway economy, best to say yes.  even as the Committee on the Future Economy charts a new way forward.

1960 – 1964 1965 – 1978 1979 – 1985 1985 – 1991 1991 – 1997 1997 – 2001 2001 – 2010 2010 – 2015 2016 and beyond • 1960: First state • Export-oriented • Shift to higher value- 1986 Economic 1991 Strategic 1998 Committe Report 2003 Economic Review 2010 Economic Strategies 2016 Committee on the development plan by approach add and skills-intensive Committee Report Economic Plan • Vision to become Committee Committee Report Future Economy UN team • Attract foreign investments • Cost-cutting • Growth Triangle globally competitive • Ensure • Raise productivity of • Chaired by Finance • EDB set up investors to grow • 1979: three-year wage measures: reduce network of knowledge economy competitiveness, cut workers in all sectors, with Minister Heng Swee Keat to spearhead manufacturing and correction policy to employers’ CPF Singapore, Riau • Manufacturing corporate & income tax raising wages as end-goal • 30-member panel to industrialisation financial sectors push up wages, induce rate, wage restraint Islands, Johor and services as twin to 20% from 25% • Reduce reliance on foreign focus on five key themes effort, attract foreign • Investments in efficient use of labour • Promote • Move to developed engines of growth • Flexible foreign worker workers by raising levies – new growth areas, investments infrastructure, • 1981: First productivity services – eg economy: enhance • Develop globally policies progressively corporate innovation, jobs, • Import-substitution nationalised campaign, emphasising tourism & banking human resources & competitive local firms • National continuing • Budget 2010: National urban infrastructure, and approach, tariffs on companies in areas manpower development, – as actively as soft infrastructure; • Government to be education & training Productivity Fund set up, connectivity imports where private sector automation manufacturing help local firms business facilitator body recommended Productivity and Innovation • Committee expected to lacked expertise expand abroad Credit (PIC) introduced complete work by end-2016 Source: MTI BT Graphics: Kelly Tay & Lynette Neo 28 29 Estimated impact of ntech disruption on global banks by 2025 (% change)

-60 Consumer -40 nance

-35 Payments -30

-35 SME -25 lending Innovation And Disruption Innovation And Disruption -30 Wealth -15 management Yasmine Yahya FINANCE DISRUPTED Assistant Business Editor, The Straits Times -20 The growth of financial technology (fintech) start-ups, the rise of automation and robotics, the increasingMortgages adoption of online and mobile banking among consumers and the ever-increasingProt needRevenue to cut costs-10 will dramatically alter the

global financial sector in the next five years and beyond. The impact onSource: jobs MCKINSEYand profits GLOBAL will BANKING be ANNUALmassive. REVIEW 2015 Estimated impact of ntech disruption Banks and the on global banks by 2025 Asian consumers using online banking (%) (% change) NA 82 -60 Japan Consumer 83 -40 nance 33 barbarians at the gates South Korea 52 96 -35 Payments 11 Fintech start-ups -30 Taiwan 17 92 spur big change as NA -35 SME Australia 94 bank profits and jobs -25 lending 96 31 come under siege Hong Kong 54 -30 Wealth 93 management -15 31 ou’ve just bought a designer Singapore 56 94 bag using a credit card. An -20 hour later, you receive Mortgages a text message on your Prot Revenue -10 2007 2011 2014 smartphone from the bank Source: MCKINSEY GLOBAL BANKING ANNUAL REVIEW 2015 Source: MCKINSEY ASIA PERSONAL FINANCIAL SERVICES SURVEY Ythat issued the card: “We’ve found you a pair of shoes and a dress that match that bag you just bought. Together, they Asian consumers using online banking (%) would make the perfect outfit for the NA Mobile technology has made banking “invisible”,82 allowing special,” he says. “If we don’t do it first, imagine what would Bentley event you noted on Facebook Japan happen if Hong Kong does.” consumers to obtain loans, buy insurance or transfer83 funds which has a black-and-gold theme. If on the go using devices such as smartphones. you buy the shoes and dress with the 33 SouthIn Koreafact, anyone can be a banker52 today by disbursing THE SINGAPORE SCENE same credit card in the next seven days, loans or capital on a peer-to-peer lending or crowdfunding96 you’ll get 10 per cent off.” Citi notes in a recent report that the fintech disruption platform. Peer-to-peer lenders are fintech start-ups that allow Sounds futuristic but the technology 11 is still at the periphery in Europe and the US. China is the individualsTaiwan to borrow17 not from banks but from investors and to do all these is already available today. exception, it says. other consumers. 92 As soon as businesses and banks “Internet giants have moved into financial services and And thenNA there’s the mammoth in the room known as decide to collaborate and tap mobility, gained considerable market share in e-commerce and third- blockchainAustralia technology. It is the technology that underpins94 the big data, social media and cloud 96 party payments. These new entrants were faster than the computing, this scenario will become virtual currency bitcoin, but it can actually be applied across any industry. At heart, it is31 simply a “distributed” database banks to offer convenient, reliable, fast and cost-efficient reality. Hong Kong 54 alternatives to traditional bank payments.” Financial institutions (FIs) all over of information, which also tracks changes made to93 that China’s fintech companies often have as many, if not more, the world are now testing out cutting- information. It is “distributed”, because it is not centralised 31 clients than the top banks. edge technology that will enable them to ST ILLUSTRATION: MANNY FRANCISCO inSingapore one location – say, a bank – but can be56 accessed by everyone interact with customers more intimately who has rights to the information in the database. 94 Elsewhere, “there is limited revenue loss in developed market banks’ core business from fintech”, Citi says. In the and provide more efficient and intuitive and backgrounds. The relationship & Company, there were some 12,000 So imagine a future in which you could trust any services. They are harnessing big data managers with the prompting from the fintech start-ups globally in August investment2007 or savings2011 platform2014 because it was backed US, peer-to-peer lenders account for only a tiny share of total loans, while assets under management by robo-advisers are to learn more about customers, using AI system were twice as likely to close 2015. The number has undoubtedly by blockchainSource: MCKINSEY technology ASIA PERSONAL and you FINANCIAL could SERVICES easily SURVEY verify artificial intelligence (AI) to analyse the deal,” he says. risen by hundreds more today, and these transactions yourself. You might no longer need to rely on only scratching the surface of the wealth industry. consumer behaviour, and investing It is important for FIs to conduct “digital attackers” pose a real threat, a bank to store your money. The picture is much the same in Singapore. There are in technology to make their back-end experiments like these, which make use McKinsey adds, particularly in retail and “As an individual investor, you might not know who you a few crowdfunding platforms that target a small market. operations smarter. of digital solutions, robotics and AI, to consumer banking. want to take a risk on. So you give the money to the bank They have platforms on which investors of all stripes can raise their game because the barbarians “We estimate that in… consumer because the bank is safe, and the bank makes the choices of get together to offer loans to SMEs that would likely be THE DIGITAL are at the gate, Mr Allaway warns. finance, mortgages, small and medium- where to invest the money,” Mr Gupta notes. turned away by banks. In return, these lenders stand to REVOLUTION “Banks that are not investing in sized enterprise (SME) lending, retail “But if there’s a mechanism which offers you complete earn a high interest. innovation stand to lose 32 per cent of payments and wealth management, 10 transparency on who you’re taking risk on, and you get to a But by and large, when it comes to their financial needs, This is not another glimpse into their revenue to disruptors in the next to 40 per cent of revenues will be at stage where you’re willing to trust that mechanism, then the most companies and consumers here still look to banks first. the future. This is happening today. two to three years. And it’s not just the risk by 2025, and between 20 and 60 trust role of the bank disappears.” Robo-advisers, which are online wealth management According to Accenture’s senior magnitude of revenue loss they should per cent of profits,” it said in its Global Accenture’s Mr Allaway says blockchain has the potential services that provide automated, algorithm-based portfolio managing director for financial services, be concerned about but the type too Banking Annual Review in 2015. to cut transaction costs for companies by as much as 80 management advice without the use of human financial Mr Jon Allaway, a bank in Hong Kong in – the loss will come from their future Attackers will likely capture only planners, have yet to make headway here. Nor have fintech 2015 teamed up with Australian start-up customers, the millennials.” a small portion of these businesses, per cent, as it will eliminate many layers of documentation Moroku to run just such an experiment These “disruptors” are fintech start- McKinsey notes. Most of the banks’ and checks. players in services such as insurance or fund transfers made at the Accenture FinTech (Innovation) ups – small, agile players that make good losses will come from having to drive “It will take a consortium of banks to unite and do it inroads into the Singapore market. Lab, with a view to implementing it in use of cutting-edge technology and prices lower just to compete. together, instead of them trying to build all their cash Still, that is not to say that nothing much is happening in the real life. social networks to deliver innovative DBS chief executive Piyush Gupta management and trade processing platforms themselves. And fintech scene. In fact, the Government has been taking steps “They brought in a sample group of products traditionally offered by FIs. believes technology is challenging if this was funded in part by the Government as well, to get to ensure Singapore stays ahead of the curve by becoming customers of varying ages, ethnicities According to consultancy McKinsey the very role of banks in society. the seed money going, then I think we’re on to something a fintech hub. 30 31 Innovation And Disruption Corporate Focus

Deputy Prime Minister Tharman Shanmugaratnam even OurCrowd’s equity crowdfunding platform. Nirmala Ganapathy said in April that regulation should not be so onerous that OCBC Bank has gone a step further to launch its open India Bureau Chief, The Straits Times it suppresses companies’ ability to experiment in fintech. application programming interfaces (API) platform. APIs are Singapore will not regulate fintech firms like it does banks sets of requirements – routines and protocols – issued by a until they reach a “meaningful scale” that can cause broader business or institution that determine how one application risks to the system, he said. communicates with another. The Monetary Authority of Singapore (MAS) has also The APIs are free for use by software developers, who Boardroom wars @ Tata Sons made a strong push to develop the fintech ecosystem here. It can now tap them to create apps embedding, for example, set up an in-house unit to promote the sector in 2015 and has OCBC’s foreign exchange rates or information about OCBC committed to invest $225 million over five years in fintech. bank branches. ata Group interim chairman Regulators from the two markets will also put fintech With things progressing quickly , it is not a stretch to say Ratan Tata does not always come across as a typical firms in touch with their counterparts overseas and share that Singapore’s finance industry could look vastly different information on financial services innovation in their individual businessman. He admits in the next 10 years. being shy, has spoken of markets. Indeed, Singapore’s ultimate goal is to change the way its Tthe need to be humble and has even Singapore’s banks are not sitting idly by as these financial system operates, DPM Tharman said in April. “Our admitted that one of his weaknesses is developments unfold. They are facing the oncoming threat aim is not to see if we can be above other financial centres, not communicating enough with people. of fintech disruption by investing millions of dollars in setting but to push the envelope and transform finance, to encourage The 78-year-old bachelor is India’s up their own innovation labs and experimenting with the latest players to find new ways of doing the business, and in a most respected businessman and is technologies to stay ahead. Many have also started their own recognised globally for converting Tata way that makes more sense to the customer... Transforming fintech incubator or accelerator programmes, through which Group from a US$1.5 billion (S$2.07 finance to be more tailored to their needs, something that’s, they identify promising start-ups, groom and help them build billion) Indian firm into a multinational if possible, cheaper or more convenient and accessible to better business models conglomerate with revenue of over These efforts have borne fruit. Early 2016, DBS Bank the customer.” US$100 billion. But some of that larger-than-life teamed up with a Hong Kong-based fintech start-up, AMP As long as things progress the way they are, the future image might have taken a hit over the Credit Technologies, to assess the credit risk of small is likely to be a win-win for Singapore’s consumers and its finance industry. dramatic dismissal of Mr Cyrus Mistry, businesses so they can obtain short-tenor unsecured loans who was chosen in 2012 to carry forward from DBS. Mr Tata’s legacy but was suddenly sacked United Overseas Bank has tied up with Israeli fintech in the week of Oct 24, 2016. OurCrowd to allow its SME clients to obtain funds through [email protected]  In a letter to employees, Mr Tata, accused by 48-year-old Mr Mistry of interference in company matters, said he had agreed to come out of retirement ST ILLUSTRATION: MIEL BESTSELLERS 33 letters that Mr Warren Buffett 8. Mochtar Riady: My Life Story after four years “in the interest of stability wrote between 1956 and 1970 to his by Mochtar Riady of and reassurance to the Tata Group”. India, where companies rarely air their the culture and ethos of the group”, 1. When Breath Becomes Air partners at the company he founded, In a five-page e-mail to the board of dirty linen in public. but he is no stranger to the group or directors at Tata Sons, Mr Mistry claimed by Paul Kalanithi Buffet Partnership Limited, to share From one side, there are claims that the Tata family. he had little say in many matters, such Mr Mistry, who brought in more than His father owns the single largest his “ground rules’ for investing which as the tie-up between Tata Sons and 100 people at different levels over the share in Tata Sons at 18.5 per cent. remain relevant today. Singapore Airlines to start domestic last four years, had come up repeatedly The senior Mistry vacated his seat on 4. Elon Musk airline Vistara, and another venture the board for his son, who took over with AirAsia. against the old guard. They maintained by Ashlee Vance that tensions had been simmering in 2006. “Being pushed into the position of The Mistrys and the Tatas – old An insight into the mind of the one of a ‘lame duck’ chairman, my desire was particularly over the last one year, in the most watched technopreneurs today, part due to disagreements over business business families from Mumbai – have to create an institutional framework close links as well. Mr Mistry’s sister Aloo who leads rocket company SpaceX and for effective future governance of the strategy. electric car maker Tesla Motors. Among Mr Tata’s pet projects was the married Mr Tata’s half-brother Noel. group,” wrote Mr Mistry. He claimed Mr Tata grew the conglomerate on the that the company was looking at a Tata Nano project to develop the world’s 5. Good Leaders Ask Great cheapest car at 100,000 rupees (S$2,100) back of India’s economic liberalisation An emotional memoir by US-based, writedown of around US$18 billion over two decades. Questions This is the story of the renowned on five businesses. to make vehicles affordable for millions Indian-American neurosurgeon Paul by John. C Maxwell philanthropist and business titan who of Indians. The Nano did not do well in He now faces the challenge of The Tata Group is a 148-year-old busi- pulling the group out of the current Kalanithi who grapples to come to The author emphasises the importance a country where people did not want to is widely regarded as a pioneer in Asia’s ness house with more than 100 operating controversy and choosing a new terms with his inoperable lung cancer, of questions and questioning in this banking and real estate sectors. companies in India and abroad. It has be seen in a car branded as the world’s which he discovered at the age of 36. chairman, while convincing everyone book. He outlines what good questions interests in consumer goods, aviation, cheapest. Mr Mistry was in favour of that one of India’s most stable business It gives the reader rare insights into the are, the questions we should ask 9. Connectography wristwatches, cars, steel, software out- shutting down the Nano project. by Parag Khanna houses is not in trouble. challenges of the severely ill. ourselves as leaders and those that we sourcing, telecommunications and hotels. The Tata Group has in return accused “Certainly, (this episode is) a significant should be asking our teams. The geopolitical expert’s book attempts The fallout dominated headlines in Mr Mistry of “repeated departures from blow to (Mr Tata’s) image, considering 2. Never Give Up: Jack Ma In His to address the question of how to Own Words 6. What Successful People Know the overnight change in the leadership,” keep people gainfully employed in an said Mr G. Chokkalingam, founder of by Suk Lee and Bob Song About Leadership expanding global economy. Equinomics Research and Advisory. The authors pull together more than by John C. Maxwell 10. The 21 Most Powerful Minutes Meanwhile, many believe that Mr 200 quotes on business values, inno- The leadership expert responds to some Mistry, who is still on the board of vation, entrepreneurship, competition, of the most frequent questions posed In A Leader’s Day many Tata companies, holds the key to management and other themes to give to him by people at different stages of by John C. Maxwell how this battle will end and that he has an insight into the mind of Mr Jack Ma, their careers. Maxwell distils all he has learnt over won the first round in the battle with who founded and leads, e-commerce four decades into a list of essentials to his e-mail. 7. Virtual Billions behemoth Alibaba. developing leadership. “It all depends on Mistry, whether he by Eric Geissinger wants to be acrimonious or amicable,” 3. Warren Buffett’s Ground Rules The book focuses on the phenomenal This list is based on a recent compilation said InGovern Research Services by Jeremy C. Miller success of bitcoin by sharing stories of of non-fiction bestsellers in Singapore, founder Shriram Subramanian. A veteran investment analyst uses the people behind it. by The Sunday Times. Tata Group interim chairman Ratan Tata and Mr Cyrus Mistry who was ousted as chairman in October. PHOTO: REUTERS [email protected] 

32 33 Inside Asia Inside Asia

Jermyn Chow Taiwan Correspondent, The Straits Times Taipei’s beating heart

The iconic 125-year-old train station has been witness to many Mr Yang Ting-feng has been working in historic milestones the station since 1976. PHOTO: ST FILE in Taiwan

henever Taipei Main Station faces an elec- trical issue, Mr Yang Ting-feng becomes Mr Fix-It. WA skilled calligrapher, the 63-year- old station staff member was the go-to person when new notices and signboards had to be written to guide commuters. For around 10 years, his elegant cursive penmanship could be seen throughout the station. But Mr Yang’s handwritten signs were eventually replaced by electronic boards. “While it is a lot easier with the computer and the fonts are standardised and more modern, the signs and notices The station sees around 600,000 commuters and visitors each day. Numbers are lack that personal touch,” he ruefully expected to hit 700,000 when the MRT linking Taoyuan Airport and Taipei City opens observed. at the end of 2016. PHOTO: ST FILE Mr Yang has seen plenty of change A view of the 125-year-old Taipei Main Station, which has been newly renovated. Served by since he started working in the station high-speed rail, metro and regular train services, it is now an important transport hub for Taiwanese people and tourists who travel within and out of the capital. in 1976, but the iconic building in the PHOTO: WEI HSINYEN, FOR THE STRAITS TIMES heart of Taipei has weathered the ups and downs of Taiwan’s fraught history for even longer. To celebrate its 125th anniversary in order to be an enduring landmark of The station traces its roots back to this July, the station, which the rail Taiwan that people can remember,” Mr 1891 when the first railway tracks were authorities now refer to as a “fifth- Chou added. laid along the Tamsui River, linking generation” station, has undergone a From a single-storey building that was Keelung, Taipei and Hsinchu. At that facelift. about half the size of a football field time, it was a freight station used for Besides a new leak-proof terracotta in the 1950s, it has since grown to a the transportation of cargo. roof, the station boasts a new lighting massive six-storey complex with four During the Japanese Occupation system that casts the building in lights basement floors. (1895 -1945), a modern-looking station of different colours every day. Served by the high-speed rail, metro was constructed on the current site The Taiwan Railways Administration and regular train services, it is now an about a kilometre from the old building (TRA), which runs the station, will free important transport hub for Taiwanese and named the Taipei Railway Station. up more commercial space for retail, people and tourists who travel within Since then, the station has witnessed dining and even hotels when its offices and out of the capital. many of the island’s milestones: the move out of the station by 2021. The Taipei Main Station sees about Kuomintang government fleeing to “Everyone talks about Taipei 101 600,000 commuters and visitors each Taiwan after losing the civil war in 1949, but it doesn’t have the kind of history day. Numbers are expected to hit like the Taipei Main Station,” TRA as well as three power transitions since 700,000 when the MRT linking Taoyuan director-general Chou Yung- hui told The free elections were allowed in 2000. Airport and Taipei City opens at the Straits Times, referring to the landmark In 2015, it was renamed Taipei Main end of 2016. Station to reflect the many modes of skyscraper which, at 509.2m, is the public transportation that now converge world’s eighth-tallest building. “But the The station has become a popular hangout for young Taiwanese and foreign workers. On weekends, many of them sit on the at the address. station also has to represent the future [email protected]  black-and-white-tiled lobby floor and turn it into a picnic area. PHOTO: ST FILE

34 35 Asian Artist Spotlight LATIFF MOHIDIN

The sculpture Harmony is one of five commissioned artworks to be placed at Duo, a mixed-use development set to rise next to the historic Kampong Glam district in Singapore.

PHOTO: LATIFF MOHIDIN

PHOTO: ST FILE It is one of five artworks that have been specially commissioned to be placed at Duo – the others are by Lee Jian Xuan Singaporean artists Sun Yu-Li, Baet For The Straits Times Yeok Kuan and Lim Leong Seng, and Malaysian artist Grace Tan. Together with the Marina One mixed- alaysian artist Latiff use development project, Duo is part of Mohidin first arrived the commercialisation of land parcels in Singapore from his under the Singapore-Malaysia railway hometown in Negeri land swop deal inked in September Sembilan in 1949, when 2010. Designed by the award-winning Mhis father moved here for work. German architect Ole Scheeren, it is set As a scruffy, carefree boy, he would to open in 2017. hang around the Bugis Street area, Latiff says the inspiration for his hawking curry puffs for pocket money. artwork stemmed from his observa- “The whole of Beach Road was my Latiff’s 1968 painting, Pago-Pago Forms, tions of nature, one of his favourite was sold for S$189,000 in 2011 at an playground then. We used to have a topics. auction in Malaysia. house in Arab Street and my father’s “Essentially, it is two leaves meeting PHOTO: NATIONAL HERITAGE BOARD office was in Java Road,” recalls the each other and forming a loop in the soft-spoken 75-year-old, who evinces middle, like the motif for bamboo a razor-sharp memory as he easily reels shoots. Philosophically, I thought of Over a career of 65 years, he has off names and life events. it as yin and yang, when two forces studied art in Europe, experimented Almost seven decades later, Latiff, come together and complement each with painting, sculpture, print-making, now an accomplished poet, painter other,” he says. translated literature, composed poems and sculptor, will display one of his The title of the artwork also signifies and published books. sculptures in Duo, a soaring upscale the harmonious relationship between His 1968 painting, Pago-Pago Forms, mixed-use development set to rise up the two countries, geographical neigh- was sold for RM572,000 (S$189,000) in next to the historic Kampong Glam bours with a shared past. 2011 at an auction in Malaysia. district, where he once lived. Latiff adds: “When I came to The grandfather of eight is now “It’s amazing, as if God designed Singapore, I realised there were based in Penang, where he lives with it to be. I never thought, while I was Javanese, Chinese, Indians, Malays here. I his homemaker wife, 63. They have a selling epok-epok (Malay for curry puff) understood the true meaning of harmony. son and four daughters. here, that one day, my artwork would It was a wonderful cultural shock.” He says: “I do a lot of things, from be shown in the same area,” he tells Latiff is a celebrated artist whose sculptures to making prints to poetry, so The Straits Times. works are prominently displayed in I often shift between these modes. All He was in town to oversee the Malaysia. His abstract stainless steel year round, I’m doing different things installation of Harmony, a 9m-tall sculptures are displayed at the Petronas and I don’t get mental block. At my age, stainless steel sculpture that will stand Twin Towers in the country’s capital, I don’t wait for inspiration to come. in the central plaza of Duo. Kuala Lumpur. I just carry on.” 

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