Monday, 7 September 2015

PAP in Business: End of Singapore Model

First published http://pijitailai.blogspot.sg/2012/12/pap-in-business-end-of-singapore-model.html




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Has Singapore reached its limit in social, environment and economic sustainability? PAP in Business is certainly not a sustainable development model for Singapore. In 2012, things are not progressing smoothly as before in the little red dot and our sustainable growth is in question.
  
A fully owned PAP company, entering business with no experience, no capital, no manpower and no office, has emerged as a new business sustainable model in Singapore?
By now everyone is familiar with Aim, the $2 company taking over the software from 14 PAP town councils and leases it back to the same town councils for rentals.  It is a normal business practice – sell and leaseback. Provided you sell at a profit and lease back at a lower rental.  Maybe PAP town councils don’t see in this direction, just like they invested money in Leman Brothers’ high risk financial products.  So, they can afford to lose money again - investing in software development and writing the investment off later.
This new business model has just been confirmed by Dr Teo Ho Pin, the coordinating chairman for 14 PAP town councils.  He also confirmed that the fully PAP owned Aim was the only bidder for sale and leaseback tender exercise.
If this is successful and is able to avoid conflict of interest, will more PAP-related businesses enter the commercial world in Singapore?  If yes, this will be the new engine of growth for Singapore economy.  If a $2 company can generate multiple times of return, then more people can afford to buy luxury homes and expensive cars. House prices and COEs for cars can be kept at a sustainable higher level without fear of losing demand.
The next step, perhaps, is to structure the new business model into a REIT (Real Estate Investment Trust) and gets it listed at SGX. A trust fund with constant rental income with good paymasters like town councils is able to attract investors at SGX. We must congratulate the PAP for being so enterprise and is able to generate high return for investors.  This new model can replace those half-surviving SMEs who can’t afford to pay high salary, high rental and high operating expenses.
However, sad to say, this is the limit for sustainable development.  The PAP has reached its peak.  Using a PAP-owned company to run a public good shows that the PAP has no more business ideas.
Things are not as smooth as before
Limit to growth or the economic led development is certainly not sustainable anymore in Singapore.  If we look at the sustainable development triangle, we will find that Singapore currently is at the stage of inequitable, unbearable and unviable development.  Our growth is unsustainable and we need to change the model urgently. Of course, the PAP will not admit it as they still want to dream of a solution through the national conversation.

Here are some examples of sustainable problems in Singapore:
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Inequitable development between social and economic, e.g. rich and poor gap.
Unbearable living space between social and environment (infrastructure), e.g. the public transport system.
Unviable policy between economic and environment (population), e.g. immigration and foreign workers.  
 
These unsustainable developments result to the following social, environment and economic problems. 

Social
Moral problems: underage sex, sex with students, sex for contracts, sex involving members of parliament donate little, low birth rate, homeless people, etc. 
Environment
Emotionless, unhappy, housing and transport problems, even language and culture problems etc.
Economic
Rich and poor gap, workers on strike, high rental, uncertain external demand, questionable returns of CPF, GIC and Temasek, etc

What is sustainable development? 
"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs". It contains two key concepts:·        the concept of "needs", in particular the essential needs of the world's poor, to which overriding priority should be given; and
·        the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs."
http://en.wikipedia.org/wiki/Brundtland_Commission#Modern_definition_of_sustainable_development
There are also suggestions to add a fourth sustainable dimension: culture. Again, Singapore will not score high in cultural aspect and has no cultural sustainability either.
We have sustainability problems and 2012 has indicated them in a big way.  What can we do? Can we depend on the PAP in Business as a new development model?

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