Economics Readings Site By Colin Ong

This blog has been created to provide an area for economics students to read about how economics impacts daily life. It is especially useful for students to understand the application of macroeconomics as communicated through the media and governmental websites.

This online resource has been set up for educational purposes.All rights are reserved by the various websites.

For further clarification, please email

For both H1/H2, use this article as a warm up - read it before going for speed up your actual exam reading time

Spare the job, save the economy

By: WONG WEI KONG The Business Times 12/11/2008

As economy banks on consumers to spend, DBS move sends wrong signal

AROUND the world, governments are putting in place stimulus packages and reflation policies to help tackle what is widely regarded as the worst global recession since World War II.

From the US and UK to China and other countries, the policies may differ in details, but the theme is similar. Many of these measures are aimed at re-capitalising the banks and lowering the cost of their funding, so as to give them the confidence to lend to one another and to their customers again.

And it is hoped that when there is lending, there will be borrowing and spending, which will rekindle demand and enable firms to produce more goods and hire more people, which will in turn generate income for the economy, to be spent again – the multiplier effect inKeynesian economics. And the key to the success of these policies will be how the consumer responds.

In this equation, the US consumer (who had started the crisis by overborrowing and overspending) will be the most important. Faced with the crisis, US consumers have stopped spending, with dire consequences for export economies like Singapore and China. But the consumer in other countries is important too.

With exports down, domestic consumption will be even more influential, and even for an export-oriented economy like Singapore's, the domestic sector still accounts for a third of GDP. Hence, the caution by Senior Minister and Monetary Authority of Singapore (MAS) chairman Goh Chok Tong last week against the paradox of thrift. Those who do not have enough savings should be "slightly cautious" and spend only on what is necessary, but "if you have sufficient savings and can afford to spend, you should continue to spend on life's little pleasures", he said.

Much focus in the coming months around the world will fall then on repairing consumer confidence and restoring borrowing and spending to normal levels. But there is a major obstacle that may stand in the way of this: the response of companies themselves to the crisis.

Last Friday, the biggest local bank DBS reported that third-quarter 2008 net profit slumped 38 per cent to $379 million compared to a year earlier – its worst quarterly performance since Q4 2005. Along with that, the bank said that it would cut 6 per cent of its workforce by the end of this month, or 900 jobs.

The announcement dealt not just a blow to the morale of the bank's own staff, but also exerted a wider psychological impact. Over the weekend, the DBS retrenchment kept popping up in conversations. "Are things really that bad?", was the constant question. "Things must be, if DBS (still regarded, it has to be said, by many as a government-linked entity) has to do something like this" was the inevitable conclusion. If more companies are to do the same as DBS, then the Singapore consumer is unlikely to play his part in the reflation process. Who'll borrow or spend, even if interest rates are at zero, if they're facing the prospects of a job loss or a big wage cut?

Critical question The issue then is whether Singapore companies are in such a critical condition that job and wage cuts are unavoidable. Only DBS can answer the question whether it was absolutely necessary to cut the 900 jobs. But to put things into perspective, the Q3 2008 profit fall was against a net profit of $610 million for Q3 2007, which was 11 per cent higher than $552 million for Q3 2006, which itself was 32 per cent higher from a restated $419 million for Q3 2005. So the latest dip is against a larger profit base resulting from several years of significant earnings growth. Compared to many US and European banks, DBS seems in far better shape.

The consensus, among economists, is that Singapore businesses generally are much better prepared to weather the storm this turn round than in previous downturns, one reason why off-budget measures to address the crisis are not expected.

The picture for fourth-quarter 2008 earnings, with the full brunt of the crisis felt, will be more negative, but Singapore companies appear on the whole to be relatively healthy. Profits are falling, yes, but these are coming off several years of record earnings in many cases, and few major companies can be said to be tottering into the red.

It must be said that companies should not flinch from cutting jobs or wages if the situation is critical enough to warrant such moves. But too often, job and wage cuts become the default options of management when responding to an economic crisis, even when their companies are on a relatively strong footing. Such measures may please the markets in the short term but may ultimately hurt them and their companies, if they contribute to the further weakening in consumer confidence. Think of it as shooting yourself in the foot.

Message to H1 Econs

Essay should be
1) Market Failure
2) Globalisation/Macroeconomic Policies

Read the Singapore Blue Book

Go thru

Market Failure
Demand and Supply
National Income Accounting
Globalisation/International Trade/Gains from Trade
Foreign exchange

Have a close look at the H2 econs essay paper

20/11 H2 Casestudy Macroeconomics Section

Almost everything came out for essay in macroeconomic section...

here are some stuff that could be useful..

If you have the time, go through here

Budget (not much use but looking at it gives you some speed)

Fiscal Policy

Purchasing Power Parity - PPP
In other words, the exchange rate adjusts so that an identical good in two different countries has the same price when expressed in the same currency.

For example, a chocolate bar that sells for C$1.50 in a Canadian city should cost US$1.00 in a U.S. city when the exchange rate between Canada and the U.S. is 1.50 USD/CDN. (Both chocolate bars cost US$1.00.)


A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Central banks attempt to stop severe deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum.

Crowding Out Effect
Governments often borrow money (by issuing bonds) to fund additional spending. The problem occurs when government debt 'crowds out' private companies and individuals from the lending market. Increased government borrowing tends to increase market interest rates. The problem is that the government can always pay the market interest rate, but there comes a point when corporations and individuals can no longer afford to borrow.

Foreign direct investment (FDI)
is a measure of foreign ownership of productive assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization

What Does Hot Money Mean?
Money that flows regularly between financial markets in search for the highest short term interest rates possible.

The regulation of the money supply and interest rates by a central bank, such as the Federal Reserve Board in theU.S., in order to control inflation and stabilize currency.Monetary policy is one the two ways the governmentcan impact the economy. By impacting the effective cost of money, the Federal Reserve can affect the amount ofmoney that is spent by consumers and businesses.

Economic Growth

A positive change in the level of production of goods andservices by a country over a certain period of time.Nominal growth is defined as economic growth includinginflation, while real growth is nominal growth minus inflation. Economic growth is usually brought about by technological innovation and positive external forces.
If you have the time, you can read this about Keynesian..

20/11 Reading Casestudy 1?

Carbon credits: How they help reduce GHG

Publication:The Business Times 24/03/2008
No. of words:596

What are carbon credits? Each carbon credit allows the holder to emit one tonne ofcarbon dioxide equivalent.

Carbon credits have no physical underlying product – unlike derivative contracts like oil or grain futures, which are written on the actual commodities.

Rather, credits are created in two ways. The first type of credits are allowances, which are handed out to developed countries and effectively set a quota on their pollution.

The second type are project-based. They are created when an entity in a developing country completes a project that permanently reduces its greenhouse gas emissions. The project is verified by the UN, which issues credits to the entity. The entity can then sell the credits to developed country buyers.

The market exists because of the Kyoto Protocol, under which some developed countries, mainly in Europe and North America, agreed to cut their GHG (greenhouse gas) emissions by an average of 5 per cent from 1990 levels by 2012.

Who buys carbon credits? End demand comes from two sources. The first and largest consists of compliance buyers, located mainly in Europe, such as power generators. They must buy credits to offset their emissions, if they are exceeding their allowances.

The second, far smaller, source comes from voluntary buyers – both companies and individuals - from the US, Japan, Australia or elsewhere, who want to help fight global warming (or give the impression they are doing so).

Some 23.7 million tonnes worth of voluntary credits were bought in 2006, compared to nearly 1.64 billion tonnes worth of UN-issued credits.

Where do credits come from? The largest source is the European Union Allowances (EUAs), which are handed out to European countries based on the pollution quotas each state is allowed. 1.13 billion tonnes, or US$24.6 billion worth, of EUAs were traded in 2006.

The second source are project-based, such as under the Joint Implementation (JI) programme or the Clean Development Mechanism (CDM). About 500 million tonnes of project-based credits, worth US$5.5 billion, were traded in 2006.

How are credits traded? Trading takes place on exchanges, like the European Climate Exchange, or the Chicago Climate Exchange.

They are also traded through hedge funds, banks, or other intemediaries, which aggregate credits from projects all over the world, structure them into portfolios, then sell them on to end-buyers.

Many funds also invest directly in projects that cut emissions, with plans to hold or sell the generated credits.

Further, buyers can purchase directly from sellers, though this may again be arranged through a broker, or an online auction platform, like Singapore's own Asia CarbonExchange.

How does carbon trading help the environment? The carbon markets are essential to setting a price for carbon. This is important because companies then recognise there is a monetary benefit from reducing their pollution, because they either need to purchase fewer credits, or can sell off excess credits.

The market exists because of the commitments from countries to cut emissions and the political will to follow through with these promises. While the market enables countries to meet commitments by buying credits from others, any efforts to fight climate change must begin with commitments from governments, companies and individuals.

Some say that a carbon tax would be more efficient to administer, and less vulnerable to lobbying by industry groups than a cap-and-trade system. Industry players counter that atrading system allows the free market to discover the price for emissions.

20/11 Reading Casestudy 1?

Indonesian watchdog probes SMS price-fixing allegations

Publication:The Straits Times 13/12/2007

It says it received a complaint that some mobile telcos were operating a cartel



In Jakarta

INDONESIA'S competition watchdog has launched a fresh probe of alleged
price-fixingby mobile telcos.

And the investigation could mean further trouble for Singapore's Temasek Holdings, after the Business Competition Supervisory Commission (KPPU) last month ruled that it had violated anti-monopoly laws with its stakes in the country's two biggest telcos.

The KPPU is now looking into allegations that the country's mobile phone operators got together to fix tariffs for short message services (SMS).

KPPU chairman Muhammad Iqbal said investigations began last week following a complaint that some mobile phone companies were operating a cartel and
fixing tariffs for SMS.

"We have been told that they signed an agreement to fix the
price of SMS. This is against business competition," he told The Straits Times.

He said the initial probe would take 30 days, and if there was evidence the companies breached anti-trust laws, further investigations would be conducted before a final ruling was made.

Last month, the KPPU ruled that Temasek – which has indirect but minority stakes in Indosat and Telkomsel – had contravened the law through cross-ownership,
price-fixingand abuse of market dominance.

Mr Iqbal said the latest investigation did not single out Indosat and Telkomsel, as it covered all the country's mobile phone companies.

But observers say the probe has raised concerns that it could again implicate Temasek Holdings over alleged violation of the anti-trust law.

Temasek has repeatedly said that it does not exercise any control over the running of its subsidiaries, ST Telemedia and SingTel, which are managed by separate boards of directors, and has no direct stakes in the Indonesian telcos.

ST Telemedia has stakes in Indosat through Asia Mobile Holdings – a joint venture with Qatar Telecom – which controls a 40 per cent share in the telco. SingTel has a 35 per cent stake in Telkomsel.

The KPPU maintains, however, that Temasek was guilty of violating anti-trust laws in the earlier case.

Analysts cautioned that it was too early to say whether Temasek would again end up in the firing line, but Mr Iqbal dismissed fears that the investment company is being deliberately targeted.

"This is a separate investigation," he said.

"It has nothing to do with Temasek. We received a complaint that some operators were
fixing the prices of SMS and we are investigating this.

"The case against Temasek is over. There is no attempt at trying to fix Temasek."

In its ruling last month, the KPPU found Telkomsel and Indosat guilty of
price fixing in the mobile phone business.

Telkomsel, which is majority owned by Telkom, a state-owned enterprise, was ordered to lower its tariffs by at least 15 per cent within two years.

The telco was also slapped with a 25 billion rupiah ($3.9 million) fine.

Temasek, apart from being fined 25 billion rupiah, has been ordered to give up its indirect stakes in one of the two telcos.

The company has said it will fight the ruling.

20/11 H2 Casestudy Microeconomics Section

Revise Market Structure

Economic Equity

Economy in which the apportionment of resources orgoods among the people is considered fair.

Efficiency Concepts

Economic efficiency is about making the best use of our scarce resources among competing ends so that economic and social welfare is maximised over time

Allocative efficiency - Achieved when the value consumers place on a good (reflected in the price they are willing to pay) equals the cost of the resources used up in production (i.e. price = marginal cost.)

Productive efficiency
Refers to a firm's costs of production and can be applied both to the short and long run. It is achieved when output is produced at minimum AC
Productive efficiency implies
The least costly labour capital and land inputs are used
The best available technology and the most efficient production processes
Exploiting economies of scale (getting close to minimum efficient scale)
Minimizing the wastage of resources in their production processes

Dynamic efficiency:
Dynamic efficiency occurs in a market over a period of time
It focuses on changes in the amount of consumer choice available in markets together with the quality of goods and services available

Dynamic efficiency can be boosted by
Research and development spending and a faster pace of invention and innovation
Investment in the human capital of the workforce leading to gains in product quality
Greater competition in markets and the transfer of knowledge and ideas across countries

Social efficiency
Is where social welfare is maximised
Where social marginal benefit of production / consumption = social marginal cost
Markets need to take into account externalities for social welfare to be achieved

X-inefficiency - X-inefficiency occurs when a business uses more inputs than are necessary for a given level of output

Market concentration

In economics, market concentration is a function of the number of firms and their respective shares of the total production (alternatively, total capacity or total reserves) in a market.

minimum efficient scale (MES)

The minimum efficient scale (MES) is the output for a business in the long run where the internal economies of scale have been fully exploited. It corresponds to the lowest point on the long run average total cost curve and is also known as the output of long run productive efficiency. The MES is rarely a single output - more likely it is a range of output levels where average cost is minimised where the firm achieves constant returns to scale. The MES will vary from industry to industry depending on the nature of the cost structure in a particular sector of the economy. When the ratio of fixed to variable costs is very high, there is great potential for reducing the average cost of production.


A reduction in long run unit costs which arise from an increase in production. Economies of scale occur when larger firms are able to lower their unit costs. This may happen for a variety of reasons. A larger firm may be able to buy in bulk, it may be able to organise production more efficiently, it may be able to raise capital cheaper and more efficiently. All of these represent economies of scale.

Oligopoly Collusion

Cartels and Collusion

Exam Tips

1) Market Failure, Price Mechanism, Price Floor/Ceiling

2) Demand Supply, Elasticity, Oil = Inflation

3) Market Structure, Monopoly (AC,MC pricing), Price Discrimination, Compare Market Structures

4) NIA, Economic growth (remember use GDP)

**5) This section may come out BIG TIME for casestudy

Foreign Exchange, International Trade, Globalisation, TOT, Marshall Lerner Condition, J Curve, Current Account, Capital Account, BOP
Interest rates, Monetary Policy
Fiscal Policy
Keynesian - Remember that Obama's Fiscal Policy is using Keynesian

6) Macroeconomic Policies Inflation, Unemployment, BOP, EG


  • Strategise how you will get at least 40 marks
  • Diagrams (label correctly) - ADAS Diagram
  • Singapore context (Read the Blue Book)
  • Compare Monopoly to PC industry not PC firm
  • Internal and External EOS
  • Rich and Poor countries
  • Revise on the Theory of Comparative Advantage Table
  • Revise about Singapore's FTA
  • Singapore Monetary Policy
  • Definitions

For Q5 Flow chart)

Foreign Exchange
X, M
ML condition, J curve
Support the currency
One reason why SG uses ERP as MP

But remember that if ? comes out on BOP deficit, must also bring in Capital Account.

McDonald's flees Iceland as Big Mac hits record


By Stuart Fagg, ninemsn Money and AFP

McDonald's will close its restaurants in Iceland this week after currency fluctuations threatened to make Icelandic Big Macs the world's most expensive.

Magnus Ogmundsson, CEO of Iceland's McDonald’s franchise owner Lyst, told Bloomberg that rising costs would have meant a Big Mac would cost US$6.36, the most expensive in the world, according to the Economist's Big Mac Index.

Norway and Switzerland currently have the world’s most expensive Big Macs, at US$5.75.

Iceland's economy collapsed last year as the global financial crisis gathered pace leaving Icelanders grappling with soaring prices and a national currency – the kronur – that dived 80 percent as the nation’s banks collapsed.

McDonald's imports the majority of its ingredients, Ogmundsson told Bloomberg, meaning the fast-food giant can no longer compete with domestic restaurants who source produce locally.

Lyst owner Jon Gardar Ogmundsson added that the two McDonald's restaurants have "never been this busy before, but at the same time profits have never been lower.

"The decision was not taken lightly," he said.

Iceland's first McDonald's opened in 1993, with the then prime minister, David Oddsson, eating the first burger.

Oddsson later became head of Iceland’s central bank, but was sacked in the wake of the financial crisis.

The collapsing kronur has made the North Atlantic island nation a cheap destination for travellers.

Indeed, a sign at the Keflavik international airport last year greeted travelers with the slogan "Welcome to Halfpriceland. Are you here for the nature or the exchange rate?".

Demand and Supply

Business Times - 31 Oct 2009

Gone with the US$300 jeans

Like any commodity that becomes overpriced, there comes a market correction. And denim's day of reckoning was long overdue.

THE US$300 pair of designer jeans is now, courtesy of the recession, the US$200 pair of designer jeans. 'It was all just a fad,' said Jeff Rudes, a founder of the hot-denim-label-du-jour J Brand Jeans and an astute observer of the suspiciously inflated prices of fashion's most eternally reinvented staple.

Like any commodity that becomes overpriced, there eventually comes a market correction. And denim's day of reckoning was long overdue.

'The floors at most of the major stores were so over-assorted that they almost looked like Loehmann's,' Mr Rudes said. 'They were just cramming jeans onto the racks.'

The introduction of US$300 jeans - perhaps even more than US$1,000 coin purses and US$500 plastic sunglasses - marked the moment when customers really began to question the prices they were seeing in department stores. Cotton dungarees for the price of an iPod was a stretch so extreme that retailers had to come up with a whole new term to suggest that the new jeans were different from the US$100 jeans they used to sell in the 1990s.

So, early in the decade designer jeans became 'premium' jeans - as in, you had to pay a premium to wear them: US$340 for Acne jeans, US$350 for Ksubi jeans, US$359 for True Religion jeans, US$395 for Notify jeans, US$580 for Dior jeans and so on. Before the recession, premium denim was one of the fastest growing categories of the apparel business, and there seemed to be no limit to what customers would pay for the latest label, fit, finish, wash or whatever Paris Hilton wore.

But the denim bubble has burst, and only a handful of such extravagantly priced jeans remain at the jeans bar - labels such as PRPS and 45rpm, which, in tacit acknowledgment of the decline of the premium business, are now more often referred to as 'artisanal' jeans.

Meanwhile, the sweet spot for designer jeans has relocated to a neighbourhood just below US$200, even though the styles do not look substantially different from the US$300 jeans that were on the sales floors of Barneys New York and Bloomingdale's only two years ago. 'The key price is under US$200 now,' said Eric Jennings, the men's fashion director at Saks Fifth Avenue. 'The super expensive stuff is not performing as well.'

Despite all this tumult, designer denim is still one of the few bright spots of the apparel industry. Annual sales of all women's jeans were actually up 5 per cent over last year to US$8.2 billion through August, though average prices were down one per cent, according to the research firm NPD - the pricing shift is reflective of a broader reset taking place in luxury stores.

During the modern gilded age, the spiralling prices of designer clothes had more to do with driving profits than the actual design or construction of a garment. Designers found they could charge a lot for the perception of prestige. Dresses and suits and handbags were priced like cars, and consumers didn't blink. But with jeans, it just felt more obvious that some kind of game was being played; the basic elements, after all, had not changed substantially in decades: five pockets, cotton, some rivets.

Now, designers are facing pressure from stores and from their competitors to rethink prices, in many cases resulting in less expensive jeans or more styles at the lower end of each designer's range.

It has not gone unnoticed by executives behind the great denim rush of 2005 that even mainstream retailers such as Gap and J Crew have caught on to the appeal of Japanese denim, whisker treatments and fading details, and that they are now producing comparable premium-look jeans that cost around US$60. Banana Republic has a new denim line coming in January.

'Charging US$600 for jeans for no reason at all - those days are over,' said You Nguyen, the senior vice-president of women's merchandising and design for Levi Strauss & Co.

Diesel, the Italian jeans company that pioneered the three-figure category, used to produce only two styles at its lowest price of US$150 for men, US$160 for women. This season there are 10, said Renzo Rosso, the label's founder, 'because the market demanded more product at this level.'

Rock & Republic, another popular label, introduced a Recession Collection this spring with styles under US$140, about US$40 less than before. Ksubi, the maker of US$280 skintight jeans, is now producing less expensive styles for stores in the UK and Australia. And Citizens of Humanity found it could entice retailers with a new style for US$148, about 10 per cent lower than its previous entry point.

'Below that, it is no longer premium,' said Gary Freedman, the company's chief operating officer. But that distinction seemed arbitrary before, and the broad pricing retrenchment suggests that there was nothing so premium about last year's jeans except the profits. The retail price of most designer jeans is calculated by multiplying the wholesale cost by 2.2. A pair of jeans that costs US$158 at Saks, for example, was sold to the store for US$72.

While that is a typical mark-up for designer fashion, the actual costs of producing jeans are much lower, and so for many years it was considered a lucrative field for start-ups. In the early part of the decade, there were more than 40 start-ups. But many of those labels, once the next big things, are but memories. Remember Blue Cult? Antique Denim? Paper Denim & Cloth?

'Five years ago, it was easy to start a jeans company,' said Scott Morrison, one of the original founders of Paper Denim & Cloth in 1999 and later a founder of Earnest Sewn, who joined Evisu in May as its chief executive. 'You basically have a market that is the fastest growing segment in the apparel business, and stores are overbuying because of it.'

Evisu is a good example. The brand, when it started in Japan in 1991, was so exclusive that only a few dozen pairs of jeans, priced at US$600, were produced each week, each with a hand-painted seagull logo on the back pocket. But the label's popularity soon led to a global licensing agreement to produce runway collections in Italy and increasingly baggy and flashy street-wear styles that, while generating US$30 million in sales, devalued the brand to the point that no designer store would touch it.

Mr Morrison said that the label has been losing money for the last four years. His strategy is to revive Evisu by starting over, with a handful of clean, unadulterated styles that will be sold at Barneys beginning in November. Many of them under US$200. But prices are not the only thing that has changed since the recession. The jeans business is just not the same without the swagger.

'You have the underpinnings of a disaster if people can't turn this around,' Mr Morrison said. Of course, people will turn denim around and around and around, lately as skinny jeans or boyfriend jeans and even more recently as jeans so skinny they are called 'jeggings'. Mr Rosso of Diesel also sensed it is time for a change. Last week, he met with his team of designers to give them a challenge, he said, to reinvent denim in a 'younger way, a fresher way'.

'It's been too many years that we've just looked at wash, and the time is now to make an evolution,' Mr Rosso said. 'Denim is the only fabric you really can transform.' -- NYT

Copyright © 2007 Singapore Press Holdings Ltd. All

Singapore mourns 'angel' killed in Mumbai attacks

"You look at her smile, you can see that radiance of her soul", said husband of Lo Hwei Yen who was murdered by the Mumbai attackers. -AFP

Thu, Dec 04, 2008

A vicious tropical rainstorm beat down from darkened skies Thursday as mourners began a funeral mass for Singapore's "angel" murdered by armed militants in India.

The rain continued even as Lo Hwei Yen's white coffin left the church.

Lo, 28, was one of at least 188 people, including 22 foreigners, killed in a shooting and grenade rampage by 10 militants who terrorised Mumbai for 60 hours last week.

The Church of Saint Teresa was packed for the private service, and family friends said hundreds of mourners were expected.

Hundreds more, including cabinet ministers, turned out during the week for her wake.

Prime Minister Lee Hsien Loong said in a letter of condolence that Lo was Singapore's first victim of terrorism.

Her death has jolted the nation, which prides itself on rigorous security measures, and politicians said Lo's death reinforces the need for vigilance.

"She was there at the wrong time," Devendran Puhaindran, the uncle of Lo's husband, Michael Puhaindran, said before the funeral.

"I remember her as a very bubbly girl, always with a smile."

Funeral mourners were urged to wear "fabulous black", a reflection of Lo's stylishness, friends said.

Even the skies obliged, making the early afternoon resemble the dim light of dusk.

Lo's smiling face has been regularly featured in newspaper photographs since the Ministry of Foreign Affairs (MFA) announced her death late last week.

"You look at her smile, you can see that radiance of her soul," her husband said in a 15-minute eulogy.

They were married only last year on the Indonesian resort island of Bali, local newspapers have reported.

Reports said Lo, a lawyer, had gone to Mumbai for only one night to deliver a talk about the global credit crunch.

She was taken hostage, along with others, by the militants who stormed the Oberoi/Trident hotel where she was staying.

Jai Sohan, an official from MFA, told reporters earlier that before she died Lo had conveyed a message from the attackers.

"The terrorists demanded that the Indian authorities refrain from storming the Oberoi hotel or else they would harm her," Sohan said.

Her body was found on the 19th floor of the hotel, he said.

"Yen, my angel, my princess, words cannot express how much I miss you," her husband said, choking on his words during the eulogy.

"I love you my baby."

F1 race boosts Singapore brand

Oct 19, 2009

THIS year's SingTel Singapore Grand Prix is not expected to yield the same amount of revenue as its debut last year, said Senior Minister of State for Trade and Industry and Education S Iswaran, who put it down to the global economic downturn.

But there's more to the F1 night race than revenue generation, he said.

'The F1 continues to improve Singapore's international branding and improves mindshare. It also serves as a very good platform for business networking, innovative activities and the creationg of new opportunities,' he told Parliament on Monday.

Last year, the event drew more than 40,000 overseas visitors and generated nearly $170 million in incremental tourism proceeds, and was watched by about 110 million people worldwide.

The Singapore Tourism Board is still collating data from various sources and should be able to give figures for this year's F1 race by the end of the year, said Mr Iswaran, who also addressed other issues surrounding the event such as the inconvenience caused by road closures and criticisms of the bumpy track of the Marina Bay circuit.

He noted that the affected roads were closed for seven days this time, compared to 12 last year, and Raffles Boulevard has been re-surfaced.

Business Times - 28 Oct 2009

Economists rethink S'pore growth models

Country needs to go beyond tweaking or fine-tuning in post-crisis world


LOCAL economists said yesterday that Singapore's model of economic growth needs rethinking, as they presented ideas such as encouraging more privately owned local enterprise, a sharper shift to services, and aiding regionalisation.

At the fourth Singapore Economic Policy Forum, organised by the Economic Society of Singapore (ESS), both private sector economists and local academics shared their views with an audience of about 190 fellow economists, public-policy makers and educators.

To meet post-crisis challenges, Singapore needs to 'go beyond tweaking or fine-tuning', to really rethink its economic growth model, said Manu Bhaskaran, Centennial Group partner and vice-president of the ESS.

He said that there has been an 'inordinate emphasis on numerical targets of GDP (gross domestic product) growth' over the past few years, which may have led to larger reactions to episodic shocks than they warranted. The economy needs to build resilience by diversifying both demand and production so as not to be as dependent on selected markets and multi-national companies (MNCs), Mr Bhaskaran said.

To strengthen 'inherent capacity', he suggested building a 'more diversified corporate eco-system' with more strong, privately owned home-grown enterprises. This could help raise consumption too, he said, Singapore's low consumption ratio being another concern among some economists.

Given the huge savings pool in Singapore, Mr Bhaskaran said, there is much capacity for growth for Singapore's 'pygmy financial sector', if savings can be mobilised to nourish the local rather than the foreign financial sector.

He also recommended regionalisation, and gave the example of Iskandar Malaysia and how linking Singapore to it could open up a larger market for local businesses.

Also calling for a change in mindset among economists in the bureaucracy, was Nanyang Technological University (NTU) economist Choy Keen Meng, who said that a 'long-held bias in favour of manufacturing must be shed' so as to develop the services sector.

Singapore's high but declining growth rate has come with severe volatility not merely due to external factors such as the global economy or electronics cycles, but also domestic industrial restructuring and the falling consumption ratio, Dr Choy said.

A stronger services sector would help temper volatility and stimulate private consumption, he said, adding that he expects services to make up 70 per cent of output in future. He thinks that the government can offer greater tax incentives and reduce start-up costs for service companies.

To boost domestic demand in the medium term, he suggested that government-linked companies hand out shares to raise Singaporeans' wealth.

Long-term growth has been the focus of several Singaporean economic forums now. In May, the government formed the Economic Strategies Committee to look at new ways for Singapore to grow, and will unveil its recommendations before next year's Budget.

But yesterday's forum also saw a couple of more specific discussions, on the use of monetary policy to contain asset price bubbles, as well as Singapore's health care system.

Tackling the latter, National University of Singapore (NUS) economist Tilak Abeysinghe spoke of how Singapore should move towards a more equitable financing of universal health care.

But his suggestions for compulsory Medishield, cross-subsidies via a Medishield tax, and an elimination of the ward-class system from public wards, drew opposing voices from the floor.

Business Times - 23 Oct 2009

Nokia could seek up to US$1 bln for iPhones: analysts

HELSINKI - Apple faces the possibility of having to pay the world's top cellphone maker Nokia up to US$1 billion for the technologies used in iPhones sold so far if it loses a lawsuit brought by Nokia, analysts said.

Nokia filed the suit in the United States on Thursday, saying Apple had infringed 10 patents and accusing the iPhone maker of trying to hitch a 'free ride' on Nokia's technology investment.

Apple, a latecomer to the cellphone industry, has won a considerable share of the higher end of the market, but it has limited intellectual property assets compared with rivals, when all vendors work under cross-licencing agreements.

Neil Mawston at Strategy Analytics said Apple could have to pay Nokia anything between US$200 million and US$1 billion for patents used in 34 million iPhones shipped so far.

The analysts said Nokia has a case to claim such sums as it is one of the key patent holders in mobile technologies, alongside Qualcomm and Ericsson.

'It is almost inconceivable that someone can produce a mobile phone without using Nokia patented technologies,' said Ben Wood, research director at CCS Insight.

An Ericsson spokesman said on Friday the company has a licencing deal with Apple.

Nokia said in its court filing it had made several price offers to Apple on per patent and on portfolio basis, but the US firm had declined those.

The analysts said top vendors who have been in the industry for a long time usually pay a few per cent of their revenue as royalties, but new entrants could pay more than 10 per cent of sales price to IPR holders.

'Intellectual property licencing costs create a significant barrier for late entrants into the mobile phone space. As a result they become net payers to the big established players such a Ericsson, Motorola, Nokia and Qualcomm,' CCS Insight's Wood said.

Nokia dominates the global handset market but it has lost some ground to new smartphone entrants like Apple, which entered the market with its iPhone in mid-2007.

Nokia's previous major legal battle ended last year with a one-time payment of 1.7 billion euros US($2.55 billion) to US mobile chipmaker Qualcomm as part of a patent agreement with Qualcomm. -- REUTERS