1 00:00:00,040 --> 00:00:02,219 Speaker 1: This is a C N. A podcast. 2 00:00:04,740 --> 00:00:05,170 Speaker 1: Yeah. 3 00:00:06,440 --> 00:00:08,680 Speaker 1: Hello and welcome to a brand new season of Heart 4 00:00:08,680 --> 00:00:10,980 Speaker 1: of the Matter. My name is steven Chair and I'll 5 00:00:10,980 --> 00:00:13,720 Speaker 1: be your host as part of my work at Sienna. 6 00:00:13,730 --> 00:00:16,470 Speaker 1: I also helm a program called Talking Point. It's a 7 00:00:16,470 --> 00:00:19,370 Speaker 1: weekly show that tackles many of the daily issues that 8 00:00:19,370 --> 00:00:22,490 Speaker 1: we grapple with as part of life in Singapore. Just 9 00:00:22,489 --> 00:00:23,450 Speaker 1: a few months ago, 10 00:00:23,540 --> 00:00:26,370 Speaker 1: we looked at how to stretch our dollar amidst rising 11 00:00:26,370 --> 00:00:26,890 Speaker 1: prices 12 00:00:27,230 --> 00:00:29,200 Speaker 1: with some tips on how we could save on our 13 00:00:29,200 --> 00:00:29,750 Speaker 1: food bill. 14 00:00:30,140 --> 00:00:32,420 Speaker 1: After all, we do love our food right? And it 15 00:00:32,420 --> 00:00:36,040 Speaker 1: takes up a large chunk of our everyday costs and 16 00:00:36,040 --> 00:00:38,740 Speaker 1: over the last few months the cost of this basket 17 00:00:38,740 --> 00:00:40,550 Speaker 1: of essential goods has ballooned 18 00:00:41,140 --> 00:00:44,330 Speaker 1: and it isn't just food that's become more expensive petrol 19 00:00:44,330 --> 00:00:48,669 Speaker 1: prices have also skyrocketed. Our electricity bills have gone up 20 00:00:48,680 --> 00:00:52,250 Speaker 1: and yes, getting that grab car during peak hours can 21 00:00:52,250 --> 00:00:54,160 Speaker 1: feel like daylight robbery. 22 00:00:54,640 --> 00:00:56,650 Speaker 1: So in a word, it's inflation 23 00:00:57,240 --> 00:01:01,400 Speaker 1: In May. Singapore's core inflation hit a 13 year high 24 00:01:01,410 --> 00:01:05,410 Speaker 1: and some economists are calling this unprecedented many of the 25 00:01:05,410 --> 00:01:09,429 Speaker 1: factors driving inflation out of our control. But how long 26 00:01:09,430 --> 00:01:13,000 Speaker 1: can this last? And what more can or should the 27 00:01:13,000 --> 00:01:15,959 Speaker 1: government do and the impending gsc hike. 28 00:01:16,040 --> 00:01:18,760 Speaker 1: Will those mean things are going to get much worse 29 00:01:18,760 --> 00:01:21,590 Speaker 1: for the average Singaporean before it gets better 30 00:01:25,910 --> 00:01:28,670 Speaker 1: to help us unpack explain. And also give us some 31 00:01:28,670 --> 00:01:31,660 Speaker 1: idea of how we can cope with inflation. Are my guests. 32 00:01:32,240 --> 00:01:35,550 Speaker 1: Associate professor, walter Tessera from the Singapore. University of Social 33 00:01:35,550 --> 00:01:39,610 Speaker 1: Sciences and Selena ling. Head of Treasury Research and strategy 34 00:01:39,610 --> 00:01:40,959 Speaker 1: at all CBc bank 35 00:01:41,340 --> 00:01:44,250 Speaker 1: Welcome both of you. Let's get to the heart of 36 00:01:44,250 --> 00:01:46,400 Speaker 1: the matter. I'm going to jump right into it and 37 00:01:46,400 --> 00:01:47,460 Speaker 1: start off with you Selena. 38 00:01:47,840 --> 00:01:50,550 Speaker 1: I mean you know you've been in banking for decades 39 00:01:50,550 --> 00:01:54,500 Speaker 1: now and you track these figures very closely tell us 40 00:01:54,510 --> 00:01:56,990 Speaker 1: is what we are seeing, very different from what we've 41 00:01:56,990 --> 00:01:59,340 Speaker 1: seen before. What has actually changed. 42 00:01:59,350 --> 00:02:01,810 Speaker 2: Well, I think in the last 10 years or so 43 00:02:01,810 --> 00:02:05,210 Speaker 2: we've gotten very comfortable to an environment where interest rates 44 00:02:05,210 --> 00:02:06,860 Speaker 2: and inflation are very low 45 00:02:07,140 --> 00:02:09,470 Speaker 2: and that makes it a bit of a sticker shock 46 00:02:09,470 --> 00:02:12,160 Speaker 2: when we see how prices have actually risen across the 47 00:02:12,160 --> 00:02:13,950 Speaker 2: board for both goods and services. 48 00:02:14,139 --> 00:02:17,690 Speaker 2: It's really a timely reminder that Singapore is really a 49 00:02:17,690 --> 00:02:20,960 Speaker 2: small open economy. We buy most of our goods and 50 00:02:20,960 --> 00:02:24,620 Speaker 2: services from overseas and hence when prices adjust, we are 51 00:02:24,620 --> 00:02:25,560 Speaker 2: a price taker. 52 00:02:26,040 --> 00:02:28,930 Speaker 2: So I wouldn't say that it's completely unusual. It's just 53 00:02:28,930 --> 00:02:31,180 Speaker 2: that in the last decade or so we really haven't 54 00:02:31,180 --> 00:02:33,260 Speaker 2: seen these type of levels of inflation. 55 00:02:33,840 --> 00:02:36,100 Speaker 1: Okay, so yeah, inflation that happens all the time. But 56 00:02:36,100 --> 00:02:39,310 Speaker 1: these unprecedented levels walter. Do you agree with what Selena 57 00:02:39,310 --> 00:02:41,170 Speaker 1: is saying? You know, I think what I'd like to 58 00:02:41,169 --> 00:02:44,119 Speaker 1: point out is that in the end it's not really 59 00:02:44,120 --> 00:02:47,660 Speaker 1: so much inflation what's important is whether your standard of 60 00:02:47,660 --> 00:02:49,679 Speaker 1: living can be maintained or whether in fact it's going 61 00:02:49,680 --> 00:02:50,359 Speaker 1: to fall 62 00:02:50,440 --> 00:02:53,130 Speaker 1: to illustrate this point. There was a period of time 63 00:02:53,130 --> 00:02:55,290 Speaker 1: where we also had pretty high inflation, I think it 64 00:02:55,290 --> 00:02:55,660 Speaker 1: was 65 00:02:55,840 --> 00:02:58,790 Speaker 1: around the aftermath of the global financial crisis. So a 66 00:02:58,790 --> 00:03:01,680 Speaker 1: little over a decade ago. But if you ask most 67 00:03:01,680 --> 00:03:05,010 Speaker 1: people on the street, those who were around back then, right, 68 00:03:05,020 --> 00:03:08,000 Speaker 1: you know, do you remember that we had high inflation 69 00:03:08,000 --> 00:03:10,580 Speaker 1: right after the GFC, and people are not going to 70 00:03:10,580 --> 00:03:12,550 Speaker 1: remember the reason why they don't remember, 71 00:03:12,639 --> 00:03:16,440 Speaker 1: is that Singapore actually enjoyed a very strong recovery from 72 00:03:16,440 --> 00:03:18,360 Speaker 1: the global financial crisis. So, you know, 73 00:03:18,540 --> 00:03:21,290 Speaker 1: people were getting good jobs, wages were rising, and the 74 00:03:21,290 --> 00:03:25,120 Speaker 1: point is, if your wages arriving faster than inflation or 75 00:03:25,120 --> 00:03:27,710 Speaker 1: keeping pace, you don't have to sacrifice your standard of 76 00:03:27,710 --> 00:03:30,180 Speaker 1: living and therefore it doesn't really bite you. And I 77 00:03:30,180 --> 00:03:33,100 Speaker 1: think what's different about today is that even though the 78 00:03:33,100 --> 00:03:34,950 Speaker 1: economy is still expanding, 79 00:03:35,040 --> 00:03:37,650 Speaker 1: everybody can feel that there are a lot of uncertainties 80 00:03:37,660 --> 00:03:38,760 Speaker 1: on the horizon, 81 00:03:38,840 --> 00:03:41,820 Speaker 1: and the economy has not expanded for everybody. There are 82 00:03:41,820 --> 00:03:43,690 Speaker 1: people out there who are not doing so well, and 83 00:03:43,690 --> 00:03:46,070 Speaker 1: so that's why it's fighting a lot harder now than 84 00:03:46,070 --> 00:03:47,450 Speaker 1: it might have been in the past. 85 00:03:47,840 --> 00:03:49,870 Speaker 1: You know, we all wish we could make more money 86 00:03:49,870 --> 00:03:52,550 Speaker 1: that would solve so many problems, right? But that isn't 87 00:03:52,550 --> 00:03:54,730 Speaker 1: the case. And as you mentioned, you know, a lot 88 00:03:54,730 --> 00:03:57,120 Speaker 1: of other factors have come into play. I mean, Singapore 89 00:03:57,120 --> 00:03:59,930 Speaker 1: is very vulnerable to what happens outside our borders is 90 00:03:59,930 --> 00:04:03,050 Speaker 1: the nature of our economy, the pandemic has not been 91 00:04:03,060 --> 00:04:05,810 Speaker 1: any help at all. And we look at the invasion 92 00:04:05,810 --> 00:04:06,860 Speaker 1: of Ukraine. 93 00:04:07,040 --> 00:04:09,410 Speaker 1: Ultimately, there are a whole bunch of stresses that, you know, 94 00:04:09,410 --> 00:04:11,850 Speaker 1: are coming to our shores whether we like it or not, 95 00:04:11,860 --> 00:04:15,410 Speaker 1: but in general, we're actually a fairly wealthy nation. Per 96 00:04:15,410 --> 00:04:17,650 Speaker 1: capita income is among the highest in the world. So 97 00:04:17,660 --> 00:04:20,550 Speaker 1: do you think the population will be able to withstand 98 00:04:20,550 --> 00:04:23,440 Speaker 1: these increases walter? What's been your reading of what people 99 00:04:23,440 --> 00:04:25,159 Speaker 1: are feeling about the rising cost of living? 100 00:04:25,740 --> 00:04:28,960 Speaker 1: So I think you've got different groups of singaporeans, you've 101 00:04:28,960 --> 00:04:31,820 Speaker 1: of course got lower income singaporeans and they are very 102 00:04:31,820 --> 00:04:35,559 Speaker 1: hard hit by inflation because the impact of inflation for 103 00:04:35,560 --> 00:04:40,190 Speaker 1: them means having to make very difficult choices, for example, 104 00:04:40,190 --> 00:04:43,770 Speaker 1: between keeping the lights on, you know, using your electricity 105 00:04:43,770 --> 00:04:46,909 Speaker 1: and utilities, maybe, for example, your kids study and and 106 00:04:46,910 --> 00:04:49,600 Speaker 1: and things like that and and feeding your family. So 107 00:04:49,600 --> 00:04:51,560 Speaker 1: if you are in a really, really limited budget, you've 108 00:04:51,560 --> 00:04:54,330 Speaker 1: got to make hard choices. But on the other hand, 109 00:04:54,339 --> 00:04:57,380 Speaker 1: if you're higher income, actually, the way you deal with inflation, 110 00:04:57,380 --> 00:05:00,110 Speaker 1: let's be honest, if maybe you eat out less one 111 00:05:00,110 --> 00:05:02,930 Speaker 1: time less a month. Okay, so I think your experience 112 00:05:02,930 --> 00:05:06,430 Speaker 1: of inflation differs widely depending on whether you've got resources 113 00:05:06,430 --> 00:05:08,460 Speaker 1: or not. And that's why I think when thinking about 114 00:05:08,460 --> 00:05:12,430 Speaker 1: the plight singaporeans space and inflation, we have to concentrate 115 00:05:12,430 --> 00:05:15,700 Speaker 1: our minds and our help on those who need the assistance. 116 00:05:15,700 --> 00:05:18,710 Speaker 1: The most, one of the difficulties here is we do 117 00:05:18,710 --> 00:05:20,830 Speaker 1: have a lot of people in the middle and upper 118 00:05:20,830 --> 00:05:24,089 Speaker 1: middle class for whom the impact of inflation is more about? Well, 119 00:05:24,089 --> 00:05:26,300 Speaker 1: I have to hold off changing my car, you know, 120 00:05:26,300 --> 00:05:28,460 Speaker 1: or have to eat out less one time less a month, 121 00:05:28,470 --> 00:05:31,469 Speaker 1: but they're actually phrasing it as if they're making life 122 00:05:31,470 --> 00:05:34,409 Speaker 1: and death decisions, which to be clear is actually a 123 00:05:34,410 --> 00:05:37,560 Speaker 1: problem for lower income singaporeans, but it's not a problem 124 00:05:37,560 --> 00:05:39,600 Speaker 1: for the broad upper middle class. We have to be 125 00:05:39,600 --> 00:05:42,990 Speaker 1: a bit careful about who we need to help most here. So, 126 00:05:42,990 --> 00:05:45,479 Speaker 1: so it really is unfair in the way it is 127 00:05:45,480 --> 00:05:47,580 Speaker 1: hitting the population. Is that what you're saying that some 128 00:05:47,580 --> 00:05:50,230 Speaker 1: will really feel it a lot harder than others, Some 129 00:05:50,230 --> 00:05:52,130 Speaker 1: will feel it a lot harder than others. They really 130 00:05:52,130 --> 00:05:54,860 Speaker 1: need to help. Some people feel it less, so they 131 00:05:54,860 --> 00:05:58,219 Speaker 1: feel it in ways which are less sensitive and less crucial. 132 00:05:58,230 --> 00:06:00,560 Speaker 1: Like I said, you know, maybe holding off changing your car, 133 00:06:00,640 --> 00:06:03,330 Speaker 1: but then those people also are very unhappy and also 134 00:06:03,330 --> 00:06:05,229 Speaker 1: you can also be quite vocal so we have to 135 00:06:05,230 --> 00:06:06,460 Speaker 1: be measured about this. 136 00:06:06,540 --> 00:06:09,130 Speaker 1: I mean, the government has been taking steps. Deputy Prime 137 00:06:09,130 --> 00:06:11,810 Speaker 1: Minister Lawrence Wong in Parliament just last week said that 138 00:06:11,810 --> 00:06:14,279 Speaker 1: the government will be helping the low income and are 139 00:06:14,279 --> 00:06:17,960 Speaker 1: prepared to give more should things become worse? But some 140 00:06:17,960 --> 00:06:20,460 Speaker 1: of the sentiment out there is that perhaps to rebate 141 00:06:20,460 --> 00:06:24,390 Speaker 1: or these cash disbursements, you know, $100 here and there, 142 00:06:24,400 --> 00:06:27,050 Speaker 1: does it really make a difference, Can it ever be enough? 143 00:06:27,050 --> 00:06:31,049 Speaker 1: No government can truly control the situation oil prices, the 144 00:06:31,050 --> 00:06:34,480 Speaker 1: supply chain issues, maybe Selena, you can jump in on this. How, 145 00:06:34,480 --> 00:06:37,590 Speaker 1: how should be looking at government grants and help? What 146 00:06:37,589 --> 00:06:39,760 Speaker 1: kind of choices should the government be having to make 147 00:06:39,760 --> 00:06:41,750 Speaker 1: in terms of how to deal with this situation? 148 00:06:41,760 --> 00:06:44,570 Speaker 2: Well, I think when you ask whether it's ever enough, 149 00:06:44,580 --> 00:06:47,719 Speaker 2: it really depends on who you ask. And typically the 150 00:06:47,730 --> 00:06:50,420 Speaker 2: person receiving the aid will say more is better. I 151 00:06:50,420 --> 00:06:52,150 Speaker 2: don't think there's ever been a case where they will 152 00:06:52,150 --> 00:06:53,360 Speaker 2: say less is better. 153 00:06:53,740 --> 00:06:55,610 Speaker 2: But I think if you take one step back and 154 00:06:55,610 --> 00:06:58,279 Speaker 2: you look in terms of the Singapore context. Most of 155 00:06:58,279 --> 00:07:01,460 Speaker 2: the time the policy makers have traditionally preferred to allow 156 00:07:01,460 --> 00:07:03,460 Speaker 2: the market pricing mechanism to work, 157 00:07:03,839 --> 00:07:07,640 Speaker 2: meaning that they would know not subsidize fuel or subsidize 158 00:07:07,650 --> 00:07:10,590 Speaker 2: food for instance, but rather that they will try and 159 00:07:10,590 --> 00:07:13,400 Speaker 2: target some of the fiscal assistance to like the low 160 00:07:13,400 --> 00:07:16,910 Speaker 2: income segment for instance, This could be a more efficient 161 00:07:16,910 --> 00:07:19,420 Speaker 2: way of doing things because we look at some of 162 00:07:19,420 --> 00:07:22,950 Speaker 2: our regional economies that subsidized fuel consumption. 163 00:07:23,240 --> 00:07:28,640 Speaker 2: It really doesn't distinguish between economically productive activities or non activities, right? 164 00:07:28,650 --> 00:07:30,930 Speaker 2: The preference is one that is quite clear, they try 165 00:07:30,930 --> 00:07:34,620 Speaker 2: not to intervene directly in the market because it distorts 166 00:07:34,630 --> 00:07:39,750 Speaker 2: the prices. If they focus their attention and resources on 167 00:07:39,760 --> 00:07:43,360 Speaker 2: specific households or income segments, 168 00:07:43,440 --> 00:07:47,490 Speaker 2: then it would also mean that it's lesser, draw on 169 00:07:47,490 --> 00:07:49,760 Speaker 2: the resources when the time comes 170 00:07:49,940 --> 00:07:51,940 Speaker 2: and of course like what we have seen over the 171 00:07:51,940 --> 00:07:55,010 Speaker 2: course of the pandemic. You know, they could continue to 172 00:07:55,020 --> 00:07:59,040 Speaker 2: dish out more assistance as and when the need arises. 173 00:07:59,050 --> 00:08:03,360 Speaker 2: But of course, you know, from the point of the recipient, ideally, 174 00:08:03,360 --> 00:08:05,630 Speaker 2: you know, they would love to have all the problems 175 00:08:05,630 --> 00:08:08,630 Speaker 2: solved at one goal rather than having help dribbled out 176 00:08:08,640 --> 00:08:10,060 Speaker 2: in bits and pieces. 177 00:08:10,240 --> 00:08:12,060 Speaker 1: I mean, so sort of saying, let me give you 178 00:08:12,060 --> 00:08:13,920 Speaker 1: the cash in hand, you kind of figure out how 179 00:08:13,920 --> 00:08:17,600 Speaker 1: to deal with the changing situations, letting you know demand 180 00:08:17,600 --> 00:08:20,600 Speaker 1: supply flow on its own. And in fact, Selena, you guys, 181 00:08:20,600 --> 00:08:23,530 Speaker 1: the banks recently raised interest rates for property. So people 182 00:08:23,530 --> 00:08:26,390 Speaker 1: are going, oh my gosh, I already cannot afford a 183 00:08:26,390 --> 00:08:27,660 Speaker 1: home here in Singapore, 184 00:08:27,840 --> 00:08:31,580 Speaker 1: much worse Now with these kind of rates is virtually impossible. 185 00:08:31,840 --> 00:08:34,459 Speaker 1: So how's this gonna play out? Give us a sense 186 00:08:34,460 --> 00:08:36,310 Speaker 1: of how would you tell a young person looking to 187 00:08:36,309 --> 00:08:38,620 Speaker 1: buy a home today? How should they look at what 188 00:08:38,620 --> 00:08:41,380 Speaker 1: seems to be the eroding value of the money they're 189 00:08:41,390 --> 00:08:44,790 Speaker 1: earning in high inflation situation like the one we're in. Now. 190 00:08:44,800 --> 00:08:45,030 Speaker 1: I 191 00:08:45,030 --> 00:08:48,310 Speaker 2: think in any case people will have to make more 192 00:08:48,309 --> 00:08:51,459 Speaker 2: discerning choices about how they want to spend 193 00:08:51,740 --> 00:08:55,340 Speaker 2: the income that they have, which is what walter alluded to. 194 00:08:55,340 --> 00:08:57,650 Speaker 2: You know, is it the right time to change a car, 195 00:08:57,840 --> 00:08:59,880 Speaker 2: Is it the right time to upgrade to a bigger 196 00:08:59,880 --> 00:09:03,360 Speaker 2: property or would you try and conserve a bit more 197 00:09:03,360 --> 00:09:06,770 Speaker 2: of your cash savings because you, I'm not quite sure 198 00:09:06,780 --> 00:09:09,020 Speaker 2: you know whether prices are going to come down any time. 199 00:09:09,020 --> 00:09:10,900 Speaker 1: These are talking about people who are looking for their 200 00:09:10,900 --> 00:09:13,860 Speaker 1: first home, they're not even changing homes or upgrading. 201 00:09:13,940 --> 00:09:16,990 Speaker 2: Yes. So I think for first time home owners, typically 202 00:09:16,990 --> 00:09:20,059 Speaker 2: the route is to go and apply for a B. T. O. 203 00:09:20,340 --> 00:09:22,410 Speaker 2: It's taking a little bit longer of course, in terms 204 00:09:22,410 --> 00:09:24,920 Speaker 2: of the pipeline for the PTO to be delivered because 205 00:09:24,920 --> 00:09:28,660 Speaker 2: of the manpower shortage on the foreign workers part and 206 00:09:28,660 --> 00:09:32,660 Speaker 2: also the rising cost of imported materials, but it is 207 00:09:32,660 --> 00:09:36,940 Speaker 2: something that actually time will probably resolve. So I think 208 00:09:36,940 --> 00:09:38,930 Speaker 2: there has to be a little bit of a gift 209 00:09:38,940 --> 00:09:40,350 Speaker 2: and take on that front. 210 00:09:40,640 --> 00:09:43,850 Speaker 2: I think it would be quite unrealistic to expect 211 00:09:44,140 --> 00:09:47,740 Speaker 2: that the policy makers can press the magic button and 212 00:09:47,740 --> 00:09:49,750 Speaker 2: BTO flats get turned out faster 213 00:09:50,140 --> 00:09:53,640 Speaker 2: or that they will actually get assistance to apply for 214 00:09:53,650 --> 00:09:55,660 Speaker 2: a private residential property. For instance, 215 00:09:56,140 --> 00:09:59,200 Speaker 2: if you look back in the past, typically the ways 216 00:09:59,200 --> 00:10:01,260 Speaker 2: of trying to cope with higher inflation, 217 00:10:01,740 --> 00:10:06,740 Speaker 2: it's actually back to very basic rules of trying to 218 00:10:06,740 --> 00:10:09,059 Speaker 2: upgrade your skills so that you get a higher paying 219 00:10:09,059 --> 00:10:11,860 Speaker 2: job or looking at where you can add value to 220 00:10:11,860 --> 00:10:13,929 Speaker 2: organization and then you can go to your boss and 221 00:10:13,929 --> 00:10:16,420 Speaker 2: say look, can you give me a bigger pay rise 222 00:10:16,420 --> 00:10:16,949 Speaker 2: for instance. 223 00:10:17,240 --> 00:10:19,320 Speaker 1: But in a way they take a while I go 224 00:10:19,320 --> 00:10:21,430 Speaker 1: for a course now it takes me three months, six 225 00:10:21,429 --> 00:10:23,560 Speaker 1: months by the time I get upgraded and my cert 226 00:10:23,740 --> 00:10:25,839 Speaker 1: it's another year before I see any kind of a 227 00:10:25,840 --> 00:10:30,680 Speaker 1: pay increment which may be 12% perhaps. Whereas the inflation 228 00:10:30,690 --> 00:10:33,850 Speaker 1: the hits are real the here and now. So workers 229 00:10:33,850 --> 00:10:37,300 Speaker 1: party Mp Jamison actually suggested that one idea was to 230 00:10:37,300 --> 00:10:40,760 Speaker 1: have mes strengthened the Singapore dollar even more or perhaps 231 00:10:40,770 --> 00:10:43,360 Speaker 1: look at increasing CPF interest rates, 232 00:10:43,540 --> 00:10:46,449 Speaker 1: things which people living here in Singapore could 233 00:10:46,840 --> 00:10:49,760 Speaker 1: feel right here right now. That can make a difference 234 00:10:49,760 --> 00:10:53,390 Speaker 1: to their daily lives. Would any of these suggestions be plausible? 235 00:10:53,400 --> 00:10:54,160 Speaker 1: What do you both think? 236 00:10:54,540 --> 00:10:57,660 Speaker 1: Some parts of the essence of his suggestions, for example, 237 00:10:57,660 --> 00:11:00,570 Speaker 1: like strengthening the Singapore dollar? That's something that meS is 238 00:11:00,570 --> 00:11:03,559 Speaker 1: already engaging in. I mean that's actually the main tool 239 00:11:03,559 --> 00:11:05,959 Speaker 1: that we have monetary policy tool that we have 240 00:11:06,040 --> 00:11:08,890 Speaker 1: to manage the Singapore economy as well as to manage 241 00:11:08,890 --> 00:11:11,600 Speaker 1: inflation is to strengthen the dollar. So I think there's 242 00:11:11,600 --> 00:11:14,599 Speaker 1: a dispute between his provision and the government is not 243 00:11:14,600 --> 00:11:16,780 Speaker 1: so much whether it should be done. It's really about 244 00:11:16,780 --> 00:11:18,540 Speaker 1: to what extent? Right. And that's I think more of 245 00:11:18,540 --> 00:11:23,460 Speaker 1: a technical question for adjusting the CPF interest rate. That's 246 00:11:23,460 --> 00:11:26,110 Speaker 1: actually more of a long term issue that we're going 247 00:11:26,110 --> 00:11:28,550 Speaker 1: to have to deal with eventually, which is that if 248 00:11:28,550 --> 00:11:31,560 Speaker 1: you have got high inflation and inflation is persistent 249 00:11:31,640 --> 00:11:34,829 Speaker 1: that if prices don't return to the original level after 250 00:11:34,830 --> 00:11:35,750 Speaker 1: this year or so 251 00:11:35,840 --> 00:11:38,500 Speaker 1: then of course it will be quite clear that the 252 00:11:38,500 --> 00:11:41,380 Speaker 1: value of our savings in CPS will be eroded and 253 00:11:41,380 --> 00:11:43,929 Speaker 1: that means that years down the road people will face 254 00:11:43,940 --> 00:11:46,900 Speaker 1: somewhat lower standard of living unless they're able to make 255 00:11:46,900 --> 00:11:49,160 Speaker 1: up the difference in between. So I mean that's an 256 00:11:49,160 --> 00:11:52,140 Speaker 1: issue has to be considered in the last policy of 257 00:11:52,150 --> 00:11:55,970 Speaker 1: returning more money to the public by giving special tax 258 00:11:55,970 --> 00:11:58,370 Speaker 1: breaks and things like that. Right again, I think it's 259 00:11:58,370 --> 00:12:01,360 Speaker 1: a matter of degree or extent because if you look 260 00:12:01,360 --> 00:12:04,530 Speaker 1: at for example the package that was announced by the 261 00:12:04,530 --> 00:12:08,870 Speaker 1: government recently, the package was going to give singaporeans more 262 00:12:08,870 --> 00:12:11,290 Speaker 1: money back through the Gsd Voucher scheme in order to 263 00:12:11,290 --> 00:12:14,510 Speaker 1: help them cope with inflation. That's in essence the same 264 00:12:14,510 --> 00:12:17,470 Speaker 1: idea as looking to see whether you can cut taxes 265 00:12:17,470 --> 00:12:20,260 Speaker 1: except that. I guess it's about the targeting. My point 266 00:12:20,260 --> 00:12:22,590 Speaker 1: here is that I don't think there's actually a serious 267 00:12:22,590 --> 00:12:25,319 Speaker 1: fundamental disagreement between him and the government is more a 268 00:12:25,320 --> 00:12:28,450 Speaker 1: matter of to what extent do you pursue the policies 269 00:12:28,460 --> 00:12:31,560 Speaker 1: and should the policies address more immediate needs or should 270 00:12:31,559 --> 00:12:34,650 Speaker 1: we still look at this long term horizon because we're 271 00:12:34,650 --> 00:12:37,630 Speaker 1: trying to address what is inflation now. But I mean 272 00:12:37,630 --> 00:12:39,350 Speaker 1: maybe Selena, you can help out with this, 273 00:12:39,940 --> 00:12:42,500 Speaker 1: it really goes down. It just keeps going up. So 274 00:12:42,500 --> 00:12:45,560 Speaker 1: should we not even be begging for further or higher 275 00:12:45,559 --> 00:12:48,969 Speaker 1: rates of inflation and perhaps plan for that, would that work? 276 00:12:48,980 --> 00:12:51,270 Speaker 2: Well I think if you look in terms of where 277 00:12:51,280 --> 00:12:53,860 Speaker 2: headline inflation currently stands 278 00:12:54,140 --> 00:12:56,310 Speaker 2: there is a school of thought that basically says well 279 00:12:56,309 --> 00:12:59,370 Speaker 2: as the global growth momentum slows down and the high 280 00:12:59,370 --> 00:13:01,760 Speaker 2: base effects from the second half last year kicks in 281 00:13:02,140 --> 00:13:05,650 Speaker 2: you should see inflation pick fairly soon 282 00:13:06,040 --> 00:13:08,650 Speaker 2: and they should stabilize from here onwards. 283 00:13:09,140 --> 00:13:11,340 Speaker 2: Obviously they're not going to go back to the pre 284 00:13:11,340 --> 00:13:14,380 Speaker 2: covid type of levels that we've seen earlier mainly because 285 00:13:14,380 --> 00:13:17,240 Speaker 2: we still have supply chain bottlenecks. You still have trade 286 00:13:17,240 --> 00:13:20,550 Speaker 2: disputes between the U. S. And china and of course 287 00:13:20,550 --> 00:13:23,459 Speaker 2: china is still pursuing this dynamic zero covid strategy. So 288 00:13:23,460 --> 00:13:25,960 Speaker 2: I think higher inflation is here to stay for a 289 00:13:25,960 --> 00:13:26,360 Speaker 2: while 290 00:13:26,940 --> 00:13:30,960 Speaker 2: but I think it would be also wrong to assume 291 00:13:30,960 --> 00:13:34,890 Speaker 2: that we're going to see continued runaway inflation from here. 292 00:13:34,900 --> 00:13:39,240 Speaker 2: I think that would require an additional catalyst or trigger 293 00:13:39,250 --> 00:13:42,280 Speaker 2: and we've already had so many headwinds thrown at us right. 294 00:13:42,280 --> 00:13:44,360 Speaker 2: The pandemic china's lockdowns, 295 00:13:44,740 --> 00:13:48,739 Speaker 2: the Russian Ukraine war etcetera. So you know it would 296 00:13:48,740 --> 00:13:53,070 Speaker 2: really require something additional to that to actually feel inflation 297 00:13:53,070 --> 00:13:54,199 Speaker 2: higher from here 298 00:13:54,210 --> 00:13:57,360 Speaker 1: in your opinion. Is this as bad as it gets, 299 00:13:57,540 --> 00:14:01,189 Speaker 2: I would look for basically headline and probably call inflation 300 00:14:01,190 --> 00:14:04,459 Speaker 2: to pick sometime around third quarter or by the end 301 00:14:04,460 --> 00:14:05,250 Speaker 2: of the year 302 00:14:05,540 --> 00:14:08,790 Speaker 2: and it should come down slightly very gradually because I 303 00:14:08,790 --> 00:14:10,740 Speaker 2: mean the fact is that a lot of the central 304 00:14:10,740 --> 00:14:14,340 Speaker 2: banks are taking very aggressive and very hawkish moves to 305 00:14:14,340 --> 00:14:18,230 Speaker 2: tighten monetary policy and that should dampen demand conditions to 306 00:14:18,230 --> 00:14:21,290 Speaker 2: a certain extent. So it's just like for singaporeans, right? 307 00:14:21,300 --> 00:14:23,960 Speaker 2: High pump prices means you would drive less 308 00:14:24,040 --> 00:14:26,660 Speaker 2: of your car and you take more public transport. It 309 00:14:26,660 --> 00:14:30,960 Speaker 2: does shape and influence consumer behavior to a large extent. 310 00:14:30,970 --> 00:14:33,660 Speaker 2: So you may dine out less at restaurants, you may 311 00:14:33,670 --> 00:14:36,450 Speaker 2: eat more hawker food, you may switch on your air 312 00:14:36,450 --> 00:14:41,260 Speaker 2: con less. There are certain adjustments to consumer preferences and behavior. 313 00:14:41,840 --> 00:14:44,150 Speaker 1: So if things are going to get worse still then 314 00:14:44,150 --> 00:14:45,890 Speaker 1: you know, I mean we kind of want to almost 315 00:14:45,890 --> 00:14:49,239 Speaker 1: be managing our expectations and and as you mentioned, you know, 316 00:14:49,240 --> 00:14:51,670 Speaker 1: our lifestyles may almost have to change and this will 317 00:14:51,670 --> 00:14:53,780 Speaker 1: affect businesses as well. So let's talk about them for 318 00:14:53,780 --> 00:14:57,220 Speaker 1: a bit because smes especially the smaller ones, they're already 319 00:14:57,220 --> 00:15:00,070 Speaker 1: finding it hard to keep absorbing costs to deal with 320 00:15:00,070 --> 00:15:01,360 Speaker 1: their manpower and 321 00:15:01,440 --> 00:15:03,760 Speaker 1: at some point they're going to have to increase prices 322 00:15:03,760 --> 00:15:05,850 Speaker 1: and pass it on to consumers as well 323 00:15:06,140 --> 00:15:08,520 Speaker 1: to to keep a decent profit. What do you think 324 00:15:08,520 --> 00:15:09,350 Speaker 1: can really help them 325 00:15:09,940 --> 00:15:12,900 Speaker 2: for smes? You know, they've had basically everything thrown at 326 00:15:12,900 --> 00:15:16,140 Speaker 2: them in the last 2.5 years or so because it's 327 00:15:16,140 --> 00:15:19,880 Speaker 2: not just an issue about rising costs because of rentals 328 00:15:19,880 --> 00:15:24,550 Speaker 2: or foreign workers in availability or now in terms of 329 00:15:24,560 --> 00:15:28,750 Speaker 2: the import costs for a lot of the raw materials 330 00:15:29,140 --> 00:15:32,010 Speaker 2: and also amidst the shortage and also fuel costs and 331 00:15:32,020 --> 00:15:34,450 Speaker 2: operation costs. Everything has gone up across the board. 332 00:15:34,840 --> 00:15:37,270 Speaker 2: I think what was unusual is that in the last 333 00:15:37,270 --> 00:15:38,950 Speaker 2: two plus years they really had 334 00:15:39,340 --> 00:15:42,340 Speaker 2: very little opportunity to pass on in terms of the 335 00:15:42,340 --> 00:15:45,830 Speaker 2: higher cost to the end consumers through higher prices for 336 00:15:45,830 --> 00:15:47,560 Speaker 2: their goods or services that they were selling. 337 00:15:48,040 --> 00:15:51,380 Speaker 2: But the environment today is a little bit different because 338 00:15:51,390 --> 00:15:54,450 Speaker 2: consumers have to take it right. When the businesses pass 339 00:15:54,450 --> 00:15:57,060 Speaker 2: on some of the cost, it's just the extent and 340 00:15:57,060 --> 00:15:59,950 Speaker 2: then that probably explains why we're all getting sticker shock right? 341 00:15:59,950 --> 00:16:03,350 Speaker 2: Because when your bowl of Wonton mee goes from $3 342 00:16:03,350 --> 00:16:06,060 Speaker 2: to $4, that's a 33% jump. 343 00:16:06,140 --> 00:16:08,000 Speaker 2: I'm not saying they all go up by the same 344 00:16:08,000 --> 00:16:08,660 Speaker 2: magnitude 345 00:16:08,940 --> 00:16:11,560 Speaker 2: but there is a lot of payback to a certain 346 00:16:11,560 --> 00:16:14,800 Speaker 2: extent from the inability of passing on all the accumulated 347 00:16:14,800 --> 00:16:16,860 Speaker 2: costs from the last two plus years. 348 00:16:19,040 --> 00:16:22,550 Speaker 2: Hi, my name is Sarah Khaldi and I'm the host 349 00:16:22,550 --> 00:16:25,650 Speaker 2: of a new podcast called Money talks Yes, we will 350 00:16:25,650 --> 00:16:28,310 Speaker 2: be talking about money but more than that, we'll also 351 00:16:28,310 --> 00:16:32,420 Speaker 2: be talking about life, personal choices, lucky breaks and how 352 00:16:32,420 --> 00:16:33,620 Speaker 2: money is the thread 353 00:16:33,630 --> 00:16:34,850 Speaker 1: running through it all. 354 00:16:34,860 --> 00:16:38,450 Speaker 2: So look out for our episodes wherever you get your podcasts. 355 00:16:40,840 --> 00:16:41,160 Speaker 1: Mhm 356 00:16:41,840 --> 00:16:43,970 Speaker 1: We also want to talk about the sandwich middle class 357 00:16:43,970 --> 00:16:44,360 Speaker 1: who 358 00:16:44,840 --> 00:16:47,000 Speaker 1: kind of in between is touch and go for them 359 00:16:47,000 --> 00:16:49,040 Speaker 1: in some cases. Okay, but a bit more of this 360 00:16:49,040 --> 00:16:51,930 Speaker 1: means it really is dire between what they put on 361 00:16:51,930 --> 00:16:54,820 Speaker 1: the table at home. Should the government also focus on them, 362 00:16:54,820 --> 00:16:57,220 Speaker 1: Why is there so much emphasis just on the lower 363 00:16:57,230 --> 00:16:59,980 Speaker 1: economic households, when I look at what the government has 364 00:16:59,980 --> 00:17:03,770 Speaker 1: announced recently in terms of additional packages to help with inflation, 365 00:17:03,940 --> 00:17:06,409 Speaker 1: it is actually fairly broad based, it doesn't touch the 366 00:17:06,410 --> 00:17:09,550 Speaker 1: higher income households, but I think the annual income limit, 367 00:17:09,560 --> 00:17:11,340 Speaker 1: for example, for the handout that's going to go out 368 00:17:11,340 --> 00:17:12,060 Speaker 1: in august, 369 00:17:12,140 --> 00:17:14,710 Speaker 1: I think that goes up to about 30,000 plus dollars 370 00:17:14,710 --> 00:17:17,540 Speaker 1: of annual income. So by no means we're talking about 371 00:17:17,540 --> 00:17:19,930 Speaker 1: just like the bottom 10 or 20%. It's actually going 372 00:17:19,930 --> 00:17:22,590 Speaker 1: to be a fairly broad group of the lower middle class, 373 00:17:22,590 --> 00:17:25,459 Speaker 1: but I do agree there are going to be singaporeans 374 00:17:25,460 --> 00:17:29,440 Speaker 1: who ordinarily think of themselves as being middle to maybe 375 00:17:29,440 --> 00:17:32,430 Speaker 1: upper middle class and maybe for example, they own a 376 00:17:32,440 --> 00:17:34,060 Speaker 1: small car or something like that 377 00:17:34,240 --> 00:17:37,670 Speaker 1: between maybe wages not going up very much the cost 378 00:17:37,670 --> 00:17:39,969 Speaker 1: of petrol going up, maybe paying for tuition for their 379 00:17:39,970 --> 00:17:41,760 Speaker 1: kids and things like that. Of course, you know, they 380 00:17:41,770 --> 00:17:44,140 Speaker 1: look at the balance sheet at the end of the month, 381 00:17:44,150 --> 00:17:46,370 Speaker 1: like where's the money going to come from there? Is 382 00:17:46,369 --> 00:17:49,600 Speaker 1: that group out there, but the concerns we have here, 383 00:17:49,600 --> 00:17:52,910 Speaker 1: our first, we do have a limited government budget and 384 00:17:52,910 --> 00:17:55,310 Speaker 1: that means that we do tend to want to focus 385 00:17:55,310 --> 00:17:58,470 Speaker 1: the money on those who are hardest hit. And I 386 00:17:58,470 --> 00:18:01,100 Speaker 1: think the important difference here is, you know, that there's 387 00:18:01,100 --> 00:18:03,600 Speaker 1: a world of difference between saying, look, I'm going to 388 00:18:03,600 --> 00:18:06,130 Speaker 1: drive the car less or give up the car versus 389 00:18:06,140 --> 00:18:08,450 Speaker 1: I have to turn off the lights and I can't 390 00:18:08,450 --> 00:18:10,270 Speaker 1: let my kids study at night because I don't have 391 00:18:10,270 --> 00:18:12,010 Speaker 1: money to pay the bill. There's a huge difference between 392 00:18:12,010 --> 00:18:14,960 Speaker 1: these two scenarios and we may want to focus more 393 00:18:14,960 --> 00:18:15,760 Speaker 1: money on 394 00:18:15,840 --> 00:18:19,140 Speaker 1: avoiding the worst case scenarios rather than people who say 395 00:18:19,140 --> 00:18:20,580 Speaker 1: they want to give up their cars. Right? So that's 396 00:18:20,580 --> 00:18:21,169 Speaker 1: one point 397 00:18:21,440 --> 00:18:23,649 Speaker 1: I think the other point I make is that for 398 00:18:23,650 --> 00:18:27,669 Speaker 1: the economy to adapt to inflation, right? People and businesses 399 00:18:27,670 --> 00:18:30,570 Speaker 1: have to change behavior, right? They have to look for 400 00:18:30,570 --> 00:18:33,340 Speaker 1: cheaper supplies if they change ways of doing business, changing 401 00:18:33,340 --> 00:18:36,530 Speaker 1: what we eat and use because when the prices go up, 402 00:18:36,540 --> 00:18:39,610 Speaker 1: that's a signal, that signal is telling us that that 403 00:18:39,619 --> 00:18:42,970 Speaker 1: item is now harder to produce, harder to source, harder 404 00:18:42,970 --> 00:18:44,359 Speaker 1: to import effect fuel, right? 405 00:18:44,440 --> 00:18:46,830 Speaker 1: I mean, the fuel prices go up and in fact, 406 00:18:46,830 --> 00:18:50,040 Speaker 1: fuel prices have been going up steadily for decades. This 407 00:18:50,040 --> 00:18:54,320 Speaker 1: has actually motivated change in many countries towards producing more 408 00:18:54,320 --> 00:18:58,090 Speaker 1: fuel efficient vehicles, towards economizing on fuel use and none 409 00:18:58,090 --> 00:19:00,670 Speaker 1: of this would have happened if prices hadn't gone up 410 00:19:00,670 --> 00:19:03,980 Speaker 1: steadily over the years. So I'm not saying that I 411 00:19:03,990 --> 00:19:06,960 Speaker 1: ignore the concerns of the sandwich class, but 412 00:19:07,040 --> 00:19:11,750 Speaker 1: I think some adjustments are inevitable. Unfortunately, policy, I think 413 00:19:11,750 --> 00:19:13,680 Speaker 1: we have to draw a line somewhere and where we 414 00:19:13,680 --> 00:19:16,210 Speaker 1: want to stop the handouts and somebody is going to 415 00:19:16,210 --> 00:19:18,120 Speaker 1: be on the wrong side of the line. That's the problem. 416 00:19:18,130 --> 00:19:21,260 Speaker 1: So unfortunately from what you're saying, it truly does sound 417 00:19:21,260 --> 00:19:23,470 Speaker 1: like they are quite stuck. You know what I mean? 418 00:19:23,470 --> 00:19:25,670 Speaker 1: Because they're not poor enough to 419 00:19:25,940 --> 00:19:28,280 Speaker 1: get more support because they can still keep the lights on. 420 00:19:28,280 --> 00:19:29,270 Speaker 1: But at the same time they're not 421 00:19:29,440 --> 00:19:31,930 Speaker 1: rich enough to buy a new C. O. E. To 422 00:19:31,930 --> 00:19:34,030 Speaker 1: renew their car for another 10 years, which is vital 423 00:19:34,030 --> 00:19:37,300 Speaker 1: for their family needs. Selena, you're talking about property earlier. 424 00:19:37,310 --> 00:19:40,149 Speaker 1: Imagine if you had to refinance your home loan that's 425 00:19:40,150 --> 00:19:42,070 Speaker 1: coming up in a few years and then now with 426 00:19:42,070 --> 00:19:43,950 Speaker 1: the new interest rates that have come out, I'll be thinking, 427 00:19:43,960 --> 00:19:47,270 Speaker 1: oh my gosh, you know that's another curve ball that's 428 00:19:47,270 --> 00:19:48,460 Speaker 1: been thrown my way. 429 00:19:48,540 --> 00:19:50,980 Speaker 1: Would you have any tips for people who are stuck 430 00:19:50,980 --> 00:19:52,170 Speaker 1: in this situation? Selina, 431 00:19:52,540 --> 00:19:55,930 Speaker 2: well actually, if you look at the various rounds of 432 00:19:55,930 --> 00:19:59,400 Speaker 2: the cooling measures and the macroprudential measures that it keeps 433 00:19:59,400 --> 00:20:03,640 Speaker 2: being thrown at the private residential property market, I think 434 00:20:03,640 --> 00:20:07,100 Speaker 2: basically is to try and rationalize a little bit the 435 00:20:07,109 --> 00:20:10,960 Speaker 2: price increases in the private residential property market 436 00:20:11,440 --> 00:20:13,669 Speaker 2: just as a point of interest. You know, if you 437 00:20:13,670 --> 00:20:17,770 Speaker 2: look at the mes stress test, they have always assumed 438 00:20:17,780 --> 00:20:21,310 Speaker 2: that the mortgage rate will be around 3.5% like I said, 439 00:20:21,310 --> 00:20:23,470 Speaker 2: it's just because for the last 10 years or so 440 00:20:23,470 --> 00:20:26,480 Speaker 2: we've been so accustomed to, you know near zero interest 441 00:20:26,480 --> 00:20:26,770 Speaker 2: rate 442 00:20:26,940 --> 00:20:29,280 Speaker 2: that we think that that is the norm. But you 443 00:20:29,280 --> 00:20:32,360 Speaker 2: know the whole great moderation debate is now giving way 444 00:20:32,540 --> 00:20:34,929 Speaker 2: to all the central bankers saying we have no choice 445 00:20:34,930 --> 00:20:37,130 Speaker 2: but to hike rates because we need to get on 446 00:20:37,130 --> 00:20:40,040 Speaker 2: top of this inflation problem. So as to your question 447 00:20:40,040 --> 00:20:43,450 Speaker 2: is how to cope, I think in terms of rising 448 00:20:43,450 --> 00:20:44,359 Speaker 2: interest rates, 449 00:20:44,740 --> 00:20:48,150 Speaker 2: it's a bit of a two sided coin because on 450 00:20:48,150 --> 00:20:52,660 Speaker 2: one hand you're paying higher mortgage rates to finance your property. 451 00:20:53,040 --> 00:20:55,690 Speaker 2: But on the other hand, rates of return for a 452 00:20:55,690 --> 00:21:00,100 Speaker 2: lot of your investment assets have also adjusted accordingly earlier. 453 00:21:00,100 --> 00:21:03,420 Speaker 2: Remember you mentioned about should there be an adjustment to 454 00:21:03,420 --> 00:21:06,399 Speaker 2: the CPF rate for instance? I think people tend to 455 00:21:06,400 --> 00:21:09,199 Speaker 2: forget that the HDB mortgage rate is actually packed to 456 00:21:09,200 --> 00:21:12,010 Speaker 2: the CPF rate, so you adjust one is going to 457 00:21:12,010 --> 00:21:14,670 Speaker 2: also affect your HDB financing cost. 458 00:21:15,040 --> 00:21:18,159 Speaker 2: So there's basically no free lunch, you know, in economic terms, 459 00:21:18,160 --> 00:21:20,179 Speaker 2: you know, you get what you pay for and you 460 00:21:20,180 --> 00:21:22,700 Speaker 2: know when interest rates are high, you get higher returns, 461 00:21:22,700 --> 00:21:25,590 Speaker 2: but you also pay higher financing costs and vice versa. 462 00:21:25,600 --> 00:21:28,850 Speaker 1: Okay, we can talk about rising costs without talking about 463 00:21:28,850 --> 00:21:30,850 Speaker 1: the elephant in the room, which is G. S. T. 464 00:21:30,859 --> 00:21:33,189 Speaker 1: When budget came around, we're all wondering, is it going 465 00:21:33,190 --> 00:21:34,450 Speaker 1: to happen? Is it not? 466 00:21:34,640 --> 00:21:36,939 Speaker 1: And now people are asking well okay we're gonna know 467 00:21:36,940 --> 00:21:39,639 Speaker 1: what's going to happen but why is it happening now? 468 00:21:39,640 --> 00:21:42,760 Speaker 1: Why can't it wait? Why not wait even a few years? 469 00:21:42,770 --> 00:21:45,960 Speaker 1: And on the other hand why spend billions of dollars 470 00:21:45,970 --> 00:21:49,270 Speaker 1: in offsetting what you're increasing by giving people money to 471 00:21:49,270 --> 00:21:51,260 Speaker 1: sort of cover those increases? 472 00:21:51,740 --> 00:21:53,920 Speaker 1: Is that too simplistic a way to look at it? 473 00:21:53,930 --> 00:21:54,949 Speaker 1: What's your takes leader? 474 00:21:55,340 --> 00:21:59,340 Speaker 2: Well taxes are always a very touchy issue and the 475 00:21:59,340 --> 00:22:01,960 Speaker 2: timing of texas is also very very tricky. 476 00:22:02,340 --> 00:22:06,800 Speaker 2: I think to a certain extent when policymakers pre announced 477 00:22:06,800 --> 00:22:08,859 Speaker 2: that they were going to raise G. S. T. They 478 00:22:08,859 --> 00:22:11,669 Speaker 2: did recognize that there's going to be growing fiscal needs 479 00:22:11,670 --> 00:22:13,350 Speaker 2: for an aging population. 480 00:22:13,840 --> 00:22:17,050 Speaker 2: But of course the time frame that they gave themselves 481 00:22:17,440 --> 00:22:20,570 Speaker 2: I think they probably everyone else in the world. Nobody 482 00:22:20,570 --> 00:22:23,199 Speaker 2: expected the pandemic. So that kind of like through the 483 00:22:23,210 --> 00:22:26,530 Speaker 2: timeline back by quite a few years I don't think 484 00:22:26,540 --> 00:22:29,500 Speaker 2: anyone disputes that government will have to spend more on 485 00:22:29,500 --> 00:22:34,380 Speaker 2: healthcare and other infrastructure needs to combat aging population. And 486 00:22:34,380 --> 00:22:35,770 Speaker 2: also for climate change. 487 00:22:35,940 --> 00:22:37,710 Speaker 2: So it's a question of where you collect the tax 488 00:22:37,710 --> 00:22:38,760 Speaker 2: revenue from 489 00:22:39,040 --> 00:22:41,209 Speaker 2: you can kick the ball down the road by saying 490 00:22:41,210 --> 00:22:44,330 Speaker 2: well let's delay G. S. T. Again for another X 491 00:22:44,330 --> 00:22:48,120 Speaker 2: number of years. But on the other hand the clamors 492 00:22:48,119 --> 00:22:53,129 Speaker 2: for additional fiscal assistance is continuing to rise because of 493 00:22:53,140 --> 00:22:55,359 Speaker 2: the inflation story. Right? I mean, just like this recent 494 00:22:55,359 --> 00:22:58,580 Speaker 2: 1.5 billion package, I mean, we're quite fortunate in the 495 00:22:58,580 --> 00:23:01,169 Speaker 2: sense that it doesn't require another draw on past reserves, 496 00:23:01,340 --> 00:23:03,189 Speaker 2: but basically there's no free lunch, you know, there's no 497 00:23:03,190 --> 00:23:05,470 Speaker 2: free money floating around that you can keep giving out 498 00:23:05,480 --> 00:23:06,770 Speaker 2: and saying we don't have to collect back. 499 00:23:07,140 --> 00:23:10,010 Speaker 1: So, so water in a sense, actually are we kind 500 00:23:10,010 --> 00:23:12,109 Speaker 1: of lucky that we are fairly rich country, that we 501 00:23:12,109 --> 00:23:15,340 Speaker 1: have all these reserves and surpluses that we can actually 502 00:23:15,340 --> 00:23:18,030 Speaker 1: do what we're doing now, you know, raise rates and say, 503 00:23:18,040 --> 00:23:20,680 Speaker 1: let me give you the money for it. Our challenge actually, 504 00:23:20,680 --> 00:23:23,030 Speaker 1: is that because we are a fairly rich country and 505 00:23:23,030 --> 00:23:25,170 Speaker 1: all of us know that, right, all all voters, all 506 00:23:25,170 --> 00:23:26,550 Speaker 1: singaporeans know that 507 00:23:26,740 --> 00:23:30,060 Speaker 1: we actually have to exercise quite a lot of discipline 508 00:23:30,140 --> 00:23:33,270 Speaker 1: to remind ourselves that if we active, if we are 509 00:23:33,270 --> 00:23:35,149 Speaker 1: a rich country and we don't worry about where the 510 00:23:35,150 --> 00:23:36,629 Speaker 1: money is going to come from, there will be a 511 00:23:36,630 --> 00:23:39,139 Speaker 1: point in the future where we will no longer be 512 00:23:39,140 --> 00:23:41,750 Speaker 1: a rich country. I guess that's really to catch. And 513 00:23:41,750 --> 00:23:45,460 Speaker 1: I think the big debate really is just how much buffer, 514 00:23:45,460 --> 00:23:47,450 Speaker 1: you know, how much reserves do we really need? 515 00:23:47,540 --> 00:23:50,660 Speaker 1: Just how rich really is rich enough. Right? And that's 516 00:23:50,660 --> 00:23:52,960 Speaker 1: I think a very difficult question to answer 517 00:23:53,040 --> 00:23:56,720 Speaker 1: the government since independence has been fairly consistent, I think 518 00:23:56,730 --> 00:24:00,000 Speaker 1: in his philosophy about how to answer this question. The 519 00:24:00,000 --> 00:24:03,149 Speaker 1: whole reason why GST is being raised is that the 520 00:24:03,150 --> 00:24:07,230 Speaker 1: government's practices that the expenditure needs should be met with 521 00:24:07,230 --> 00:24:11,340 Speaker 1: current revenue right? Rather than drawing on expenditure needs by 522 00:24:11,350 --> 00:24:13,350 Speaker 1: looking at the reserves or taking more money out of 523 00:24:13,350 --> 00:24:15,580 Speaker 1: the reserve, so that the government of the day's principle 524 00:24:15,590 --> 00:24:18,230 Speaker 1: and the following through of it by raising GSD and 525 00:24:18,230 --> 00:24:20,659 Speaker 1: trying to argue to the public that this is actually 526 00:24:20,660 --> 00:24:22,530 Speaker 1: the best way to go about doing it. Of course, 527 00:24:22,540 --> 00:24:25,389 Speaker 1: other political parties have a different point of view. And 528 00:24:25,390 --> 00:24:28,500 Speaker 1: I think ultimately it's up to Singaporeans to decide what's 529 00:24:28,500 --> 00:24:31,150 Speaker 1: the right perspective with a view to take here. For 530 00:24:31,150 --> 00:24:33,350 Speaker 1: my part, at least when it comes to the GSD 531 00:24:33,350 --> 00:24:34,350 Speaker 1: increase 532 00:24:34,540 --> 00:24:37,890 Speaker 1: and this whole system of GSD rebates and so on. 533 00:24:37,890 --> 00:24:40,480 Speaker 1: I mean, I think fundamentally a lot of economists would 534 00:24:40,480 --> 00:24:41,260 Speaker 1: agree 535 00:24:41,340 --> 00:24:44,000 Speaker 1: that this is actually the way to do it if 536 00:24:44,010 --> 00:24:47,050 Speaker 1: you had to raise the consumption tax, because when you 537 00:24:47,050 --> 00:24:49,820 Speaker 1: raise the consumption tax, like GST, what you're really concerned 538 00:24:49,820 --> 00:24:52,560 Speaker 1: about is that the tax ends up being regressive, which 539 00:24:52,560 --> 00:24:55,860 Speaker 1: is to say that low income individuals pay a greater 540 00:24:55,859 --> 00:24:58,670 Speaker 1: share of the income because they virtually spend everything they earn. 541 00:24:59,040 --> 00:25:02,230 Speaker 1: And so our practice is to offset that by giving 542 00:25:02,230 --> 00:25:05,760 Speaker 1: the low too broad middle class the GST assurance package 543 00:25:05,770 --> 00:25:07,740 Speaker 1: to give them money back. Right? Of course, at the 544 00:25:07,740 --> 00:25:10,820 Speaker 1: end of the day G. S. T. Will raise revenue. 545 00:25:10,820 --> 00:25:12,950 Speaker 1: That's the whole point of raising the tax. But the 546 00:25:12,950 --> 00:25:16,510 Speaker 1: idea is to distribute the bulk of that tax increase 547 00:25:16,520 --> 00:25:19,660 Speaker 1: on high income people as well as of course foreigners 548 00:25:19,660 --> 00:25:21,420 Speaker 1: that come to Singapore and buy stuff here. I mean 549 00:25:21,420 --> 00:25:22,350 Speaker 1: that's the idea there. 550 00:25:22,640 --> 00:25:22,840 Speaker 1: Yeah. 551 00:25:23,240 --> 00:25:26,950 Speaker 1: So so something that Singapore prides itself on its political 552 00:25:26,950 --> 00:25:30,379 Speaker 1: stability and long term planning, we're able to make plans 553 00:25:30,380 --> 00:25:33,490 Speaker 1: and often fulfill them to a T. But the war 554 00:25:33,490 --> 00:25:35,890 Speaker 1: is really pretty much a mess right now, you know, 555 00:25:35,890 --> 00:25:40,270 Speaker 1: unresolved tensions in Russia, Ukraine, Myanmar, most recently Sri Lanka, 556 00:25:40,540 --> 00:25:42,919 Speaker 1: there doesn't seem to be a clear light at the 557 00:25:42,920 --> 00:25:43,770 Speaker 1: end of the tunnel. 558 00:25:43,940 --> 00:25:44,450 Speaker 1: So 559 00:25:44,940 --> 00:25:48,670 Speaker 1: these plans we make could still change where we see 560 00:25:48,670 --> 00:25:51,550 Speaker 1: an end to inflation or is it more doom and 561 00:25:51,550 --> 00:25:52,670 Speaker 1: gloom And perhaps 562 00:25:53,040 --> 00:25:55,550 Speaker 1: when will all this happen? When will we see the 563 00:25:55,550 --> 00:25:56,950 Speaker 1: light at the end of the tunnel? 564 00:25:56,960 --> 00:25:59,610 Speaker 2: Well, my short answer to you Stephen is that now 565 00:25:59,609 --> 00:26:02,220 Speaker 2: there's a lot of market concern about the big R. 566 00:26:02,220 --> 00:26:05,870 Speaker 2: Word recession, right? It takes a good old recession to 567 00:26:05,869 --> 00:26:10,600 Speaker 2: basically tamped down demand conditions and when demand falls, prices 568 00:26:10,600 --> 00:26:11,760 Speaker 2: would adjust lower. 569 00:26:11,940 --> 00:26:15,030 Speaker 2: I do agree in the short term there is some 570 00:26:15,040 --> 00:26:17,790 Speaker 2: downward stickiness to prices because like I said, you know 571 00:26:17,790 --> 00:26:19,920 Speaker 2: in the last three years or so a lot of 572 00:26:19,920 --> 00:26:23,379 Speaker 2: firms had no way of increasing prices to end consumers. 573 00:26:23,380 --> 00:26:27,200 Speaker 2: They just had to absorb all the increased accumulated costs 574 00:26:27,210 --> 00:26:30,210 Speaker 2: in terms of their business costs and that really squeezed 575 00:26:30,220 --> 00:26:31,560 Speaker 2: their profit margins 576 00:26:31,640 --> 00:26:34,310 Speaker 2: and now it's really payback time, you know, the global 577 00:26:34,310 --> 00:26:36,350 Speaker 2: economy was a much firmer footing 578 00:26:36,640 --> 00:26:38,620 Speaker 2: For the last 12 months and that's why they feel 579 00:26:38,619 --> 00:26:42,060 Speaker 2: comfortable to pass on some of those backlog of business 580 00:26:42,060 --> 00:26:43,169 Speaker 2: cost increases. 581 00:26:43,340 --> 00:26:44,940 Speaker 2: But things will come to a turn. You know, if 582 00:26:44,940 --> 00:26:47,850 Speaker 2: you really do get a sharp downturn, a hard landing 583 00:26:47,850 --> 00:26:51,260 Speaker 2: or recession in any scenario, then you will see prices 584 00:26:51,270 --> 00:26:53,850 Speaker 2: adjust lower. I think it would be inevitable. It will 585 00:26:53,850 --> 00:26:56,040 Speaker 2: take a bit of time. There may be a longer 586 00:26:56,040 --> 00:26:58,060 Speaker 2: timeline because of the supply chain issues, 587 00:26:58,240 --> 00:26:59,590 Speaker 2: but it will probably happen 588 00:26:59,600 --> 00:27:02,210 Speaker 1: walter. What do you think? I think what we're generally 589 00:27:02,210 --> 00:27:05,919 Speaker 1: hoping for is that we will have price stability rather 590 00:27:05,920 --> 00:27:09,149 Speaker 1: than deflation per se. Right. Because I think if you 591 00:27:09,150 --> 00:27:11,050 Speaker 1: have a large amount of deflation 592 00:27:11,140 --> 00:27:13,900 Speaker 1: that also has problems of his own, I mean, generally 593 00:27:13,910 --> 00:27:18,330 Speaker 1: deflation is associated in fact with fairly difficult economic conditions. 594 00:27:18,330 --> 00:27:20,350 Speaker 1: I mean, it's well known, for example, that 595 00:27:20,440 --> 00:27:23,290 Speaker 1: the Japanese economy has hardly been growing for the past 596 00:27:23,300 --> 00:27:26,210 Speaker 1: decade or more. And that's also been consistent with a 597 00:27:26,210 --> 00:27:29,359 Speaker 1: very long period of price of in fact, slight deflation 598 00:27:29,359 --> 00:27:31,810 Speaker 1: in the Japanese economy. And the bigger problem is something 599 00:27:31,810 --> 00:27:34,150 Speaker 1: that people often don't think a lot about is that 600 00:27:34,160 --> 00:27:36,850 Speaker 1: when you do have severe deflation 601 00:27:36,940 --> 00:27:39,909 Speaker 1: that actually dramatically increases the cost of depth that you 602 00:27:39,910 --> 00:27:42,880 Speaker 1: already carry. If you have bought a house or another 603 00:27:42,880 --> 00:27:45,020 Speaker 1: kind of largesse that you've taken out a large mortgage 604 00:27:45,020 --> 00:27:47,640 Speaker 1: on it. What deflation actually means for you is that 605 00:27:47,640 --> 00:27:49,330 Speaker 1: when you wake up and you stare at the market 606 00:27:49,330 --> 00:27:51,460 Speaker 1: value of your house all of a sudden you realize 607 00:27:51,460 --> 00:27:53,720 Speaker 1: you owe more money on this thing then you can 608 00:27:53,730 --> 00:27:56,810 Speaker 1: sell it for. And so that creates quite a serious 609 00:27:56,820 --> 00:27:58,359 Speaker 1: overhanging the economy. 610 00:27:58,440 --> 00:28:01,720 Speaker 1: Everybody thinks deflation is nice until they realize what they 611 00:28:01,720 --> 00:28:03,270 Speaker 1: actually have to live with in terms of 612 00:28:03,440 --> 00:28:06,040 Speaker 1: the cost of debt that caring and also the possibility 613 00:28:06,040 --> 00:28:09,030 Speaker 1: that it might be also associated with a slowing economy 614 00:28:09,030 --> 00:28:11,650 Speaker 1: and maybe even, you know, price of wage adjustments as well. 615 00:28:11,660 --> 00:28:13,070 Speaker 1: In the end of the day, I think what we 616 00:28:13,070 --> 00:28:16,390 Speaker 1: want is price stability and we want to have a 617 00:28:16,390 --> 00:28:18,820 Speaker 1: better standard of living. I think that's the thing to 618 00:28:18,820 --> 00:28:21,740 Speaker 1: concentrate on and it sounds like really the world truly 619 00:28:21,740 --> 00:28:23,810 Speaker 1: is around. I mean what goes around does kind of 620 00:28:23,810 --> 00:28:25,760 Speaker 1: come around eventually. So there's no 621 00:28:26,040 --> 00:28:28,720 Speaker 1: there's no real way to sort of end it on 622 00:28:28,730 --> 00:28:32,500 Speaker 1: just a high note. So inflation deflation and in fact 623 00:28:32,510 --> 00:28:34,859 Speaker 1: I even worked on a topic called shrink relation. 624 00:28:35,240 --> 00:28:37,010 Speaker 1: You buy the same bag of chips is just a 625 00:28:37,010 --> 00:28:39,840 Speaker 1: few grams less but it costs the same. So that's 626 00:28:39,850 --> 00:28:43,050 Speaker 1: that's a whole other Ballgame. But Selena and walter, thank 627 00:28:43,050 --> 00:28:45,330 Speaker 1: you so much for coming in and sharing your insights 628 00:28:45,330 --> 00:28:48,940 Speaker 1: on this topic. We we really enjoyed the discussion and 629 00:28:48,940 --> 00:28:50,860 Speaker 1: hope that you know, next time we meet perhaps it'll 630 00:28:50,860 --> 00:28:52,970 Speaker 1: be on a happier note to talk about how things 631 00:28:52,970 --> 00:28:54,260 Speaker 1: have changed a month from now. 632 00:28:54,540 --> 00:28:56,560 Speaker 1: But thanks for coming on and joining us here on 633 00:28:56,570 --> 00:28:57,560 Speaker 1: heart of the matter. 634 00:28:57,640 --> 00:28:58,920 Speaker 1: Thank you. Thanks 635 00:28:59,740 --> 00:29:02,550 Speaker 1: well, thanks for listening and I hope you enjoyed our guests. 636 00:29:02,560 --> 00:29:05,440 Speaker 1: Part of the matter is just one of several new 637 00:29:05,450 --> 00:29:07,660 Speaker 1: audio products that are available on the C. N. A 638 00:29:07,660 --> 00:29:11,550 Speaker 1: website and app or wherever you get your podcasts do 639 00:29:11,550 --> 00:29:13,850 Speaker 1: reach out to us if you have an idea or 640 00:29:13,850 --> 00:29:16,280 Speaker 1: a view or just want to give us some feedback 641 00:29:16,290 --> 00:29:18,270 Speaker 1: on the show, we'd love to hear from you 642 00:29:18,340 --> 00:29:20,230 Speaker 1: details are in our show notes, 643 00:29:20,440 --> 00:29:24,540 Speaker 1: The team behind this podcast, Audrey one, Jacqueline Chan, Daniel 644 00:29:24,540 --> 00:29:29,560 Speaker 1: Lee and Christina Robert and I'm Stephen signing off for now.