Woman's forex gains turn to woes

Woman's forex gains turn to woes
A FINANCIALLY savvy Tokyo housewife who made 400 million yen (S$5.3 million) trading in foreign exchange markets was fined last Friday for evading tax, a court official said.
Yukiko Ikebe, 60, got a suspended jail sentence and was fined 34 million yen after she used relatives' names to make her gains look smaller and avoid paying tax, public broadcaster NHK said.

'She felt it was unfair to have to pay tax on her gains, when she made losses some years,' NHK quoted the judge as saying. 'She spent the money on kimonos and jewellery.'

Forex trading has become more popular in recent years in Japan, where low interest rates have led retail investors to seek new sources of profit.

REUTERS

Lessons from toilets, transport in Hong Kong

Lessons from toilets, transport in Hong Kong
ON A recent three-week trip to Hong Kong, I noticed many changes there compared to my last trip six years ago.
For one thing, I was impressed by the cleanliness of the toilets in the airport, shopping centres, hotels and restaurants. Most now have automatic, hands-free taps, flush and soap dispensing systems. This is very hygenic as it greatly minimises contact and spread of germs. In addition, hand dryers-cum- hand towels are available in most toilets.

What impressed me most was that most restaurants (fast-food chains like McDonald's included) provide wet tissues for every patron.

To reduce traffic congestion in Singapore, there may be other ways besides increasing the number of ERP gantries. This is one area where we can learn from Hong Kong's efficient MTR system.

It has many stops, and each one comes with many sheltered underground exits (some stations have as many as 10). This makes it very convenient for commuters to reach their destination, rain or shine. Indeed, one need not walk far to reach an MTR stop.

Besides, waiting time for trains is about three minutes, even during off-peak hours.

I travelled in Hong Kong widely during my stay and I realised there are few private cars on the roads compared to Singapore. I mainly saw buses, taxis and trams. The MTR is the most popular choice of transport.

I am not downplaying the strengths of our MRT. In fact, when I was in Hong Kong, I missed the convenience of toilets at every MRT stop. Hong Kong's MTR does not have toilets and the stations have wide platform gaps. But if we can incorporate the merits of others in our own system, we can really be on our way to reaching our goal of having a world-class transport system.


Elizabeth Ng Boon Kwan (Mrs)



I am not downplaying the strengths of our MRT. But if we can incorporate the merits of others in our own system, we can really be on our way to reaching our goal of having a world-class transport system.

Temasek not keen on LSE stake: Source

Temasek not keen on LSE stake: Source
A BRITISH newspaper has reported that Temasek Holdings has approached Nasdaq to buy its 30 per cent stake in the London Stock Exchange (LSE).
The report in London's The Sunday Times yesterday was based on unnamed sources.

It claimed that Temasek had made the approach in recent days and the deal could lead to a 'full takeover' of the LSE by Temasek.

But well-placed industry sources told The Straits Times that the speculation was unfounded. Contacted last night, a Temasek spokesman would say only that it does not comment on market speculation.

Last Monday, Nasdaq Stock Market said it might sell its stake in the LSE worth £800 million (S$2.44 billion), to bolster its chances of buying Nordic exchange operator OMX and that it was already in touch with interested parties.

Nasdaq said later that it would not sell its LSE stake to a single buyer.

What's in a condo name? More than you can imagine

What's in a condo name? More than you can imagine
Faced with an increasingly strict set of naming rules, developers are forced to get creative with foreign terms, coined-up words
By Fiona Chan, Property Reporter


THE NAME GAME: 'If you look at a name, you can tell which era the development was built in. Anything with 'garden' or 'view' is likely to be in the 1980s. If it's 'vale', probably the 1990s, and if it starts with 'The', it's after 2000.' -- Ms Diana Kulik of Sim Lian Land, on how to tell a condo's age from its name.

IF PROPERTY developer Lippo Group had its way, the condominium it is building in Kim Seng Road would be called Trinity rather than Trillium.
But the group's original application for 'Trinity Towers' was deemed too 'religious' by the authorities, revealed Lippo's executive director Thio Gim Hock.

'It was rejected because it had religious connotations. They even said not to bother to appeal,' he said. The three-tower project was renamed Trillium, after the name of a three-petal flower.

Now, as Lippo and other developers gear up to launch a slew of new condos, they are cracking their heads over what to name them. It may seem like a small problem, but unexpected rejections such as the one Lippo received can make the task surprisingly knotty.

Indeed, the name game is so important that Mr Simon Cheong, head of luxury developer SC Global, personally names each of his projects - from the iconic The Boulevard Residence to the latest Marq on Paterson Hill.

Larger developers, such as Frasers Centrepoint and City Developments (CDL), pick names from proposals that sometimes number in the hundreds.

At CDL, the final say for condo names lies with executive chairman Kwek Leng Beng. But suggestions are pooled from all sources, including an occasional staff competition. Even Mrs Kwek reportedly put in her two cents' worth for CDL's latest project, Cliveden at Grange.

The main reason naming a condo is not as easy as just calling it The ABC lies in a surprisingly strict set of rules for building and estate names, outlined by the Street and Building Names Board (SBNB).

For instance, condo names, according to a fairly recent rule change by SBNB, must not end with 'park' - in case the project is mistaken for an actual park.

But more than 100 condos already have that word in their names, including older estates Bedok Park and Clementi Park. To get around the rule, developers have recently taken to using the French word 'parc' instead and putting it in front of the name, such as in Parc Emily.

SBNB also advises against using 'place' and 'link' because the terms are also used for road names. 'Tower' can be used only for buildings of at least 30 storeys, and 'villa' only for landed houses. And 'city' - such as in the 910-unit City Square Residences or the 600-unit Citylights - is applicable only for developments 'on a grand scale', says SBNB.

With more and more words struck out over the years, it is no wonder many developers now find it easier to come up with a whole new one.

This has led to the latest rage in condo-naming: coined words, such as in The Lumos in Leonie Hill and The Marq.

'It's partly because developers are running out of names, and partly because of the new guidelines on naming projects,' said Ms Diana Kuik, executive director of Sim Lian Land. 'It is now a very 'in' thing to do as it gives the project a modern feel.'

Sim Lian's Viz at Holland is a good example. 'The condo is near Holland Village, and there's a lot of buzz and activity in the area,' said Ms Kuik.

'So we combined 'village' and 'buzz' to get 'Viz'. It's short, easy to remember, and hip-sounding.'

But newly coined names are only one of the current trends in a market where condo names appear to come and go in waves of fashion.

In fact, Ms Kuik said it is often possible to distinguish a condo's age from its name.

'If you look at a name, you can tell which era the development was built in,' she noted. 'Anything with 'garden' or 'view' is likely to be in the 1980s. If it's 'vale', probably the 1990s, and if it starts with 'The', it's after 2000.'

Other current naming fads include the almost ubiquitous '@' sign - officially known as the 'commercial at' and unofficially used in every attempt to be trendy. At least 30 condos in Singapore boast this symbol. Almost all are new projects that surfaced after the dot.com boom.

Property watchers have also observed that the recent boom in high-end condos has led to a proliferation of names using 'residences'. Indeed, about half the 50-odd condos in this category - including Marina Bay Residences and The Orchard Residences - are located downtown or in the prime districts of 9 to 11.

A more longstanding trend is foreign words. These have long been de rigueur among developers, who seem to think they add a certain je ne sais quoi (meaning 'an indescribable attribute') to a moniker.

For instance, there are 34 condos here with names that start with 'Casa', the Spanish word for 'house'. Another 21 begin with 'Le' or 'La', the French words for 'the'.

Some projects are named after actual foreign locations, such as Cote d'Azur in Marine Parade, which sits uncomfortably on the tongues of most Singaporeans.

But while foreign names might sound more chi-chi, they are also more chancy.

One developer related the story of how SBNB once rejected a French name for a condo because the word sounded like 'danger' in English.

'We wanted to name the condo 'Perle', which means 'Pearl' in French,' the developer said. 'But the board said it sounded too much like 'peril', so we had to change it.'

Interestingly, while SBNB is sticky on grammatical accuracy in the use of 'Le' and 'La' - they refer to male and female nouns respectively in French - it appears unconcerned about condo names that begin with 'De' or 'D'.

'De' is a French proposition that usually means 'of' or 'for'. It is used as 'D' only if followed by a word starting with a vowel.

But Singapore's condos include such grammatical eyesores as D'Dalvey and D'Hillside Loft. The Straits Times understands that these are considered to be coined words, rather than foreign derivatives, and thus allowable.

As developers try to stay on SBNB's good side, straightforward combinations of road names and numbers are also getting popular. The latest trend is names beginning with 'One', such as One Shenton, which 14 condos have adopted.

But this does not mean developers have no room for creativity, as shown by the unusual 2 rvg and 66 OGR, which stand for River Valley Grove and Orange Grove Road, respectively.

Even if a name does not meet with contention by SBNB, other unexpected circumstances may force it to be changed at the last minute.

Industry insiders, for instance, know that Pharos on the Waterfront was the original name for the CDL condo near the Singapore River that is now called Tribeca. But what they might not know is that the name was changed mere weeks before the condo's launch because CDL discovered that Pharos referred to a lighthouse that had been destroyed by an earthquake.

'We didn't want anyone to make the association,' said CDL general manager Chia Ngiang Hong with a laugh.

At the end of the day, however, a project's name is probably one of the lowest factors on a buyer's list of priorities, said Mr Ku Swee Yong, director of marketing and business development at Savills Singapore. 'The product quality and returns potential are the top things people look at. In the final evaluation, buyers almost never consider names.'

Floating condo takes opulence to high seas

Floating condo takes opulence to high seas
S'pore buyers can preview luxury liner as marketing drive makes stop here
By Joyce Teo, Property Correspondent


GLAMOROUS LIFE: The 219m luxury vessel will offer lots of entertainment, including four restaurants and a casino. Each suite of The Four Seasons Ocean Residences will come with floor- to-ceiling windows, living room areas and master bedrooms with walk-in dressing rooms and bathrooms. -- PHOTOS: FOUR SEASONS OCEAN RESIDENCES

View more photos

DO YOU feel like you have been living too long in one place and are now longing and pining for life on the high seas? Then try splurging some of that hard-earned money on a plush home onboard a luxury liner.
It is a simple - albeit opulence-laden - concept. Your multimillion-dollar home is part of a lavish vessel that plies the world's oceans, calling at exotic ports along the way.

As the shipboard homes are mega-pricey, there is no chance of being stuck at sea with any of the great unwashed with their sub-prime mortgages - and you can always count on a great ocean view.

Singaporeans can check out the concept next month, when Savills International unveils The Four Seasons Ocean Residences - 112 private residences on a 219m luxury vessel with staff and high-end services - at the Four Seasons Hotel here.

The homes range in size from 797 sq ft to nearly 8,000 sq ft. Most are two- and three-bedders, with features that include floor-to-ceiling windows, living room areas, master bedroom suites with walk-in dressing rooms and bathrooms en suite, kitchens, and staff entrances.

Prices range from 2.885 million euros (S$5.97 million), or about 3,500 euros per sq ft, for a 797 sq ft one- bedder to 30 million euros for a 7,860 sq ft four-bedroom, three-storey penthouse.

The liner - due for completion in 2010 - will offer plenty of entertainment, including four restaurants, an 11,000 sq ft spa, a style casino, a supermarket, a wine cellar and a driving range.

There will also be concierge service and an excursion coordinator to arrange for those exotic and expensive tours. Yearly service charges start from 72,000 euros.

The liner will average about 250 days in port a year and sail to places like Antarctica and events such as the 2012 Olympics in London and the F1 Grand Prix in Monaco.

Developer BV International Ocean Holdings, a joint venture between Bayview Financial and Ocean Development Group, picked Singapore as one of the centres to promote the floating condo.

'We are focusing on a very select group of people at the highest socio-economic level,' said Mr Danny Warman, vice-president of Bayview Financial, a privately held United States-based real estate investment and mortgage finance company.

'Singapore definitely has a significant amount of wealth. It's one of the most important financial centres in the world,' he said.

The marketing campaign started in London in May and then moved to New York and South Africa. Singapore will be the first Asian stop.

However, keen buyers can select units only at four global sales events, starting in Hong Kong on Sept 11 to 12. The other ones will be in a city in Europe, the Bahamas and the US.

'The beauty of it is that owners of the residences would be able to travel and explore the world without having ever to leave their home,' said Mr Warman.

Because the developer wants to have 'global diversity' on board, it will also be marketed in places such as Tokyo, Moscow and Mumbai.

There is only one other floating condo liner - The World of ResidenSea, which set sail from Oslo in 2002 with about 70 residents on board. There were reports at the time that it had trouble selling its residences.

More than a decade later, the market has changed, and more of these floating residences are likely to come. Mr Warman said they are selling a new product with strong branding. 'As soon as we sell out this one, we will do another one,' he said.

Jamie Yeo's tip to students: Use blog to improve English

Jamie Yeo's tip to students: Use blog to improve English


COSYING UP: Naval Base Secondary students (from left) Belda Lee and Geraldine Cheng, both 14, take turns to have their photo taken with Star Blogger Jamie Yeo. -- ST PHOTO: NG SOR LUAN

IF YOU have a blog, use it as an opportunity to improve your English and knowledge of the language. That was Stomp Star Blogger Jamie Yeo's advice for 110 secondary school students and teachers who turned up for a Straits Times Media Club workshop at the Singapore Press Holdings auditorium in Toa Payoh on Friday.
The 29-year-old, who is also a presenter with ESPN Star Sports, was a guest celebrity at the monthly event, and made her appearance after Stomp editor Jennifer Lewis gave a lively presentation on the website.

'I like reading blogs but I am also very particular about how they are written,' said Yeo who has been blogging on Stomp for almost a year and spends entire weekends crafting her online entries.

'A blog is a great way to work on your writing skills and expand your vocabulary.'

The one-time radio DJ and TV actress also fielded personal questions during the 45-minute session. Asked about the best thing that has happened to her so far, Yeo, who is married to radio DJ Glenn Ong, said: 'I think it's falling in love.'

The media club workshop is a monthly event organised by The Straits Times for students from secondary schools which subscribe to IN, the weekly magazine distributed to these secondary schools every Monday.

When it comes to religion, give children some space

When it comes to religion, give children some space
Intense religious instruction during kid's upbringing may do more harm than good
By Tessa Wong
LAST Thursday, I took a trip down memory lane with my parents while watching Jesus Camp, a documentary film about an evangelical Christian summer camp for children in the United States.
It was like watching my whole childhood play out on the big screen as I have a similar religious background. Speaking in tongues? Check. Fervent proselytising to strangers? Check. Emotional prayer sessions? Check.

After the film, my parents and I started discussing whether bringing up children with religious traditions was ever justifiable.

They thought so, arguing that such education was not 'brainwashing', but merely teaching children how to be good by bringing them up in the ways of God.

I agreed with them on that count. After all, parents have the right to teach their children moral values, however they see fit, and religion is often seen as the best tool to achieve this goal.

I do not doubt the merits of such an education. I am grateful my parents used Christianity to instil strong moral values in me.

Yet, I feel it can get sticky when parents take things to extremes, as is sometimes the case.

The children in Jesus Camp, for example, were taught they are soldiers at the forefront of a radical 'culture war' in the US between the religious right and liberal left.

They were told, therefore, to support President George W. Bush and adopt conservative views on issues such as abortion and global warming.

This, I believe, crossed that fine line between using religion to teach good values, and indoctrinating a child with political bias.

It also illustrates how bringing up a child in a religious environment, while sometimes beneficial, also deprives him of the free will to choose what he wants to believe.

One may argue that children can exercise choice as they grow up. But with such intense drilling, how many of them actually will?

What is more, being steeped in fervent religiosity at such a young age can sometimes cause much angst and confusion in later years, as it was in my case.

For many years, I was conflicted: There were beliefs I was supposed to subscribe to, and there were the beliefs I gradually developed, independent of Sunday school.

I found I disagreed with the notion that just because something wasn't biblical, it wasn't good.

It also did not help that my early fervent religiosity was induced using slightly unethical means.

My childhood years were an emotional whirlwind. Scenes in Jesus Camp showing anguished children tearfully breaking down at prayer sessions, urged by pastors to repent for their sins, were extremely familiar to me.

Some evangelical Christians justify such pressure. They say it is necessary to teach humility and subservience to God. But I tend to see it as emotional coercion of an innocent child, with any resulting trauma possibly outweighing any good.

While using religion to mould a child is perfectly acceptable, parents should exercise a light touch and give their children room to think independently.

Army captain, 25, collapses and dies after completing 21km run

Army captain, 25, collapses and dies after completing 21km run
By Lee Hui Chieh
COMPLETING the 21-km-long half marathon in 90 minutes, Captain Ho Si Qiu, 25, crossed the finish line at 7am yesterday - and collapsed soon after.
His heart had stopped.

Within 30 seconds, medical personnel were at his side.

They carried him to a medical post nearby and started pumping his chest. A breathing tube was inserted and he was injected with resuscitation drugs.

But they could not revive him.

At 7.23am, he was taken by ambulance to Singapore General Hospital, with cardiopulmonary resuscitation or CPR administered en route.

At the hospital, doctors again tried - and failed - to save him.

The platoon commander from the Officer Cadet School was pronounced dead at 8.07am yesterday.

The regular serviceman became the latest fit and active person to die suddenly while exercising strenuously.

At least four others have died this year while running, practising taekwondo or working out in the gym.

Among them was teenage triathlete Thaddeus Cheong, 17, who collapsed and died after completing a gruelling triathlon two months ago.

His death resulted in a Sports Safety Committee being set up last month, whose first task was to review current safety measures and recommend a comprehensive safety framework.

It has submitted a preliminary report to the Ministry of Community Development, Youth and Sports, said the minister, Dr Vivian Balakrishnan, yesterday.

Speaking at a dancesport competition last night, Dr Balakrishnan noted that he did not believe that Capt Ho's tragic death was a case of inadequate medical preparation, equipment or attention.

The organisers of the Singapore Bay Run - formerly known as the Safra Sheares Bridge Run and Army Half Marathon - had 16 ambulances, each equipped with a defibrillator, and 130 medical personnel on standby.

Capt Ho was among the record 70,000 people, including Defence Minister Teo Chee Hean, who had taken part in the event organised by the Army, Safra National Service Association and the Singapore Sports Council.

Participants in the run, now into its 16th year, could compete in the 12km or 21km events, or run recreationally for 6km or 12km.

A spokesman for the organising committee said that CPR was continuously performed on Capt Ho on the way to the hospital.

Dr Balakrishnan, who had run in the 12km event with his son, said: 'So at this point I would say it would appear that everything possible, that could be done, was done.'

At Capt Ho's home yesterday evening, some 20 well-wishers were sitting with the family in their living room.

The family declined to comment when approached.

One of Capt Ho's colleagues, who did not wish to be named, said: 'He was an exemplary officer, and he was a good man.'

Tit-for-tat safety spats

Tit-for-tat safety spats


SAFE FOR CHILDREN?: A toy vendor hawking her wares in Shandong province. The quality of toys made in China has been in the spotlight. -- PHOTO: REUTERS

A NUMBER of made-in-China products have been taken off the shelves recently for safety reasons, while China has hit back with its own list of unsafe foreign imports.

PROBLEMATIC PRODUCTS IMPORTED BY CHINA

Aug 9: China charges that 24 imported gas turbines made by US industrial institution General Electric had caused several big accidents.

Aug 15: China bans the import of three types of biscuits made by Arnott's Indonesia, a subsidiary of US food giant Campbell Soup, saying the biscuits contain levels of aluminium three times beyond the safety threshold.

Aug 21: China announces that it returned 272 heart pacemakers imported from the US in April after quality tests found problems.

Aug 22: China's General Administration of Quality Supervision, Inspection and Quarantine says it has found pesticides, poisonous weeds, and dirt in soy bean imports from the US. The beans - crushed for oil and used as animal feed - are the biggest single US farm export to China.


PROBLEMATIC MADE-IN-CHINA PRODUCTS

Aug 1 and Aug 15: US toy giant Mattel issues two separate recalls involving over 20 million Chinese-made toys it says were coated in lead-laced paint and contained small magnets harmful to children.

Aug 18: A chain of Dutch bed stores says it will be recalling more than 1,300 Chinese-made foam mattresses amid fears that they had been sprayed with toxic insecticide.

Aug 19: New Zealand launches an investigation into woollen and cotton clothes made in China after scientists find dangerous levels of formaldehyde.

Aug 22: Chinese-made blankets found to contain high levels of formaldehyde are recalled across Australia and New Zealand.

Wheat hits record price as bad weather prompts inflation fears

Wheat hits record price as bad weather prompts inflation fears


Published: August 24 2007 03:00 | Last updated: August 24 2007 03:00

Wheat prices jumped to an all-time high yesterday as panicked buyers rushed into the market amid extremely tight supplies, raising fears of a global food inflation spike.

Canada, the world's second-largest wheat exporter, warned output might be almost 20 per cent below last year as adverse weather damaged the crop as it had done in Europe and Australia.

Japan and Taiwan, which depend on foreign wheat supplies, bought new cargoes in the international market while India launched a large tender to boost its inventories ahead of its peak demand season.

Gavin Maguire, analyst at Iowa Grain in Chicago, said the combination of disappointing production levels and strong demand was pushing up prices. "Wheat buyers are beginning to panic."

In Chicago, wheat for December delivery surged to an all-time high of $7.54 a bushel. Prices have jumped 110 per cent in the past 12 months and have risen threefold since 2000.

Food industry executives warned that meat, poultry and dairy prices would climb in the short term as farmers and processors passed on higher feed costs to consumers.

Alex Waugh, director-general of the UK Flour Milling Association, said the cost of wheat was at an unprecedented level: "Wheat costs for flour millers in the UK now stand some £500m higher than last year. This has yet to come through in wholesale or consumer prices."

The International Grains Council cut its estimate for the 2007-08 wheat crop to 607m tonnes while forecasting demand would reach 614m tonnes, resulting in a further stock drawdown. It said global wheat inventories were at their lowest since 1979.

James Gutman, of Goldman Sachs in London, said: "Buyers are scraping the bottom of the bushel of the inventories."

Beijing replaces top policy thinker

Beijing replaces top policy thinker
Party apparatchik takes over from Zheng Bijian, the man behind 'peaceful rise' theory
By Chua Chin Hon, China Bureau Chief
BEIJING - MR ZHENG Bijian, the influential thinker behind China's 'peaceful rise' policy, has been officially replaced at a top Beijing think-tank by a party apparatchik, sources confirmed yesterday.
The decision, first reported by The Straits Times in June, was formalised earlier this month during an internal meeting involving members of the China Reform Forum (CRF) think-tank.

Mr Zheng's replacement as CRF chairman will be Mr Su Rong, 58, the executive vice-president of the elite Central Party School (CPS), which trains the next generation of Chinese leaders.

Mr Su will retain his appointment at the party school for now while it remains unclear what future role, if any, the 75-year-old Mr Zheng will play, sources said.

The senior scholar is seen as one of the most respected Chinese thinkers in recent years, having helped shape domestic and international opinion on the country's rise.

His thesis of 'peaceful rise'', which proposes a benign scenario for China's emergence as a global power, has since been adapted by Beijing as the framework of official rhetoric.

Mr Su, in comparison, has relatively little experience in research or academia, a point which has irked some scholars at the CRF. Prior to his appointment at the party school, Mr Su was the party secretary of north-western Gansu province.

China's influential Vice-President Zeng Qinghong is said to have presided over this latest personnel switch - one of the many changes expected in the party school and the broader political establishment in light of a major leadership reshuffle later this year.

Mr Zeng himself is widely expected to relinquish his concurrent appointment as president of the party school soon in favour of a younger leader who might be groomed to lead the ruling Chinese Communist Party (CCP) and the country.

Training aside, the party school also serves the crucial objective of helping future Chinese leaders network with young and upcoming provincial cadres as well as military commanders. President Hu Jintao was appointed to head the CPS in 1993 soon after he was earmarked as China's 'fourth-generation leader'.

Some political observers thus expect Mr Hu to name a successor at the upcoming leadership meeting - called the 17th Party Congress - and then tap him to run the party school.

Mr Hu's preferred successor is widely rumoured to be Mr Li Keqiang, the top official of north-eastern Liaoning province. But there has been no clear sign that he has won out over other competing candidates, such as Shanghai's leader Mr Xi Jinping or Jiangsu's Mr Li Yuanchao.

The political uncertainty over the succession issue at this late stage hints at the limits of Mr Hu's power in the ruling party, and analysts expect horse-trading to be done right up to the last minute.

Beijing has not officially announced the date for the Congress, though media reports in recent weeks suggest that it could be held in the second or third week of October.

Maths prodigy, 9, gets into HK varsity

Maths prodigy, 9, gets into HK varsity
A NINE-YEAR-OLD maths prodigy, who won admission to the Hong Kong University yesterday, told reporters he struggled to communicate academically with his own age group.
March Boedihardjo, an Indonesian-Chinese resident in Hong Kong, obtained two As and a B in his A-levels and earned a place in the Hong Kong Baptist University (HKBU).

He will begin his mathematics undergraduate course next month, the university authorities said. HKBU said it has designed a special five-year course for March, leading to a master's degree,

When asked what he does in his spare time, he told reporters: 'I like to read books, but on the weekends I like to go out to play with friends.'

He said they play chess, Monopoly and cards. 'We can play games together but academically, we can't communicate.'

AGENCE FRANCE-PRESSE

Ng Teng Fong overtakes Khoos as S'pore's richest

Ng Teng Fong overtakes Khoos as S'pore's richest
By Grace Ng
PROPERTY magnate Ng Teng Fong has overtaken the Khoo family to top Forbes magazine's list of Singapore's richest people - with a cool US$1 billion (S$1.52 billion) lead.
Mr Ng, 79, a low-profile billionaire, who controls Far East Organization, was catapulted to the top spot by a 36 per cent surge in his wealth to US$6.7 billion amid the current property boom.

Far East is one of Singapore's major developers and has built more than 700 hotels, shopping malls and condominiums over the years.

A rare female rich-lister, Ms Christina Ong, the managing director of luxury fashion retailer Club 21, which also owns an Apple iPod reseller, was among 12 newcomers to the top 40 list.

She is the wife of Malaysian tycoon Ong Beng Seng, who made the Malaysian list.

Ms Ong was listed by Forbes at No. 36 as an entrepreneur in her own right, having amassed wealth of US$150 million.

Tops on Forbes list
1. Ng Teng Fong,



... more
RELATED LINKS
Singapore's 40 richest
No. 2 on the list are the 14 descendants of Mr Khoo Teck Puat, the man behind the Goodwood Park Hotel, who died in 2004. They are said by Forbes to be worth US$5.7 billion. This excludes $125 million they recently donated to build a new hospital in Yishun named after their father, and US$32 million to Peking University in China.

Despite this, their wealth - much of it from a stake in Standard Chartered Bank - was up 14 per cent from US$5 billion last year, which was just a tad above Mr Ng's US$4.9 billion at that time.

It was a banner year for all of Singapore's 40 wealthiest citizens, whose collective riches ballooned 14 per cent to US$32 billion.

This figure pips the US$19 billion held by Thai barons but trails Malaysia's top 40, who hold US$43 billion, up from US$26 billion last year.

With sterling economic growth of 7.9 per cent and a 19 per cent surge in the stock market in the year to August, Singapore tycoons with listed interests in real estate, shipping and palm oil did particularly well.

They include Mr Zhong Shen Jian, 48, who controls the mainboard-listed Yanlord Land Group. Mr Zhong, who became a Singapore citizen last year, built his US$2.5 billion fortune by developing luxury residences in his native China. He is fourth on the list.

United Overseas Bank's (UOB) chairman Wee Cho Yaw and his family are No. 3. Their wealth shrank slightly to US$3.3 billion, from US$3.4 billion last year. Their holdings have been partly hit by a 10 per cent drop in UOB's shares since mid-July, due to global concerns about risky home loans in the United States.

Property magnate Kwek Leng Beng of Hong Leong Group and his family took fifth spot with US$1.1 billion.

Familiar names of yesteryear missing from this year's list include Mr Tang Wee Kit, chairman of retailer Tangs, and the Phua brothers who run furniture-maker HTL International. The wealth of these individuals dipped below the price of entry to Forbes' rich list of US$100 million. This was raised from last year's minimum of US$55 million.

Mr Simon Cheong, 50, well known for his upmarket condominium projects, makes his debut on the list at No. 15. His US$480 million fortune is held in SC Global, a high-end residential property developer here, and in an Australian developer AV Jennings.

At No. 32 is entrepreneur Victor Sassoon, 49, who runs a franchise selling Rolex watches in Singapore. He also co-runs the coffee chain Coffee Bean & Tea Leaf in 16 countries, and is 'buddies with Paula Abdul, who is a fan of his coffee', noted Forbes.

Keeping rates too low may spur risky investing: BOJ

Keeping rates too low may spur risky investing: BOJ
Although bank keeps rates unchanged, governor's words signal he intends to raise borrowing costs


LOOKING FORWARD: Investors see a 39 per cent chance of the Bank of Japan increasing interest rates next month, according to Credit Suisse Group calculations. -- PHOTO: AP

TOKYO - BANK of Japan (BOJ) governor Toshihiko Fukui said there is a risk that keeping interest rates too low will spur risky investment, signalling that the central bank intends to raise borrowing costs.
'Distortions and the misallocation of resources could occur if interest rates are kept at levels inconsistent with the economy,' he told reporters in Tokyo yesterday, after his board kept interest rates on hold as expected.

'Our policy is forward-looking and we can act when we're confident in our judgment.'

Central banks in Japan, the United States and Europe injected more than US$350 billion (S$535 billion) into the banking system this month, after credit dried up following the collapse of the US sub-prime mortgage market.

Mr Fukui's comments indicate that he may resume his policy of gradually increasing borrowing costs later this year.

Mr Richard Jerram, chief Japan economist at Macquarie Securities in Tokyo, said: 'If stability returns in the coming weeks, then the BOJ will probably feel comfortable to raise rates in a month.'

Investors see a 39 per cent chance of a rate increase next month, according to Credit Suisse Group calculations based on interest payments.

Mr Fukui said the central bank's policy needs to dissuade investors from making one-sided bets in the currency market. Still, he maintained that monetary policy is based on an analysis of the economy and prices.

'It's highly likely that the Japanese economy will achieve sustainable growth with stable prices,' he said, repeating last month's assessment.

'However, we'll examine upcoming data and financial market movements at home and abroad and will make an appropriate policy judgment.'

Japan's key rate of 0.5 per cent is the lowest among major economies.

Mr Fukui has said the bank needs to normalise policy now that the economy has overcome 15 years of stagnation that followed the bursting of a stock and property bubble in the early 1990s.

He described the tumult as a 'repricing' process and said investors are adjusting from a 'too-loose' judgment of risk. He said the bank will watch whether the correction is orderly and whether the moves will affect economic growth.

'It's not the type of problem that will go away in a few weeks,' he said.

Some analysts said the US Federal Reserve's decision last Friday to cut the rate at which it lends to banks may have made it difficult for the BOJ to tighten credit.

Mr Fukui said the BOJ is not influenced by the policy judgment of other central banks. Each monetary authority views the prospects for growth and prices in its own economy, he said.

'Although Fukui denied the BOJ's policy should be simply affected by other central banks, it's not realistic to expect a BOJ rate hike when the Fed's cutting rates,' said Bank of America senior economist and strategist Tomoko Fujii.

The BOJ's next decision will be on Sept 19, a day after the Fed holds its regular policy-setting meeting. Interest-rate futures show traders are betting the Fed will cut its key overnight lending rate on Sept 18 or earlier.

The European Central Bank this week added more funds to the banking system, while saying it would stay vigilant on inflation, prompting investors to raise bets of a Sept 6 rate increase.

BLOOMBERG NEWS

Russia nominates own candidate to run IMF

Russia nominates own candidate to run IMF
in London

Published: August 23 2007 03:00 | Last updated: August 23 2007 03:00

Russia challenged western dominance of world international financial institutions yesterday by nominating a surprise candidate, Josef Tosovsky, the former Czech premier and ex-central bank chief, to run the International Monetary Fund.

The nomination pitted Mr Tosovsky against Dominique Strauss-Kahn, the former French finance minister, who has the backing of the European Union.

Russia's move ran into immediate trouble when the Czech Republic, which joined the EU in 2004, declared that it was standing by the EU's decision to support the French candidate.

However, Moscow's move shows Russia's increasing international assertiveness and willingness to clash with the west over issues ranging from energy supplies to US plans to site missile defence bases in Europe.

The Kremlin has also raised concerns over US-EU domination of international institutions - an issue that plays well with large developing countries, including China, India and Brazil.

The IMF chief is traditionally selected by European nations while the World Bank head is chosen by the US. But developing nations have long resented this informal arrangement, which dates back the the 1940s.

Alexei Kudrin, Russia's finance minister, said the move was aimed at boosting the prestige of the IMF, which had failed to handle recent financial crises, including the 1998 Russian financial crisis.

"Given the IMF's failures in resolving crises in a number of countries, the IMF needs to raise its prestige", he said. Mr Kudrin praised Mr Tosovsky as a proven crisis manager. He said developing states, including Brazil, India and China, had all expressed support for an open selection process in talks.

Mr Putin has slammed world financial institutions as "archaic, undemocratic and unwieldy" and called for their radical overhaul to reflect the surging growth of developing nations.

The US Treasury department said of Russia's move: "We look forward to working with our colleagues at the fund to select a new managing director. The secretary looks forward to speaking with any candidate."

The French finance ministry said: "We believe that it will not put into question the momentum behind Dominique Strauss-Kahn's candidacy." Mirek Topolanek, the Czech prime minister, said "Mr Tosovsky was not, and is not, the Czech Republic's candidate for this post."

Mirek Topolanek, the Czech prime minister, said: "Mr Tosovsky was not, and is not, the Czech Republic's candidate for this post."

Officials said Russia's move would have no impact on talks over hosting part of the planned US missile defence system.

Few countries yesterday backed Moscow's choice of Mr Tosovsky. Mr Strauss-Kahn, in Beijing yesterday, was reported as saying he felt he had China's backing.

A senior Indian finance ministry official told the FT that as far as he was aware there had been "no conversation" about the nomination and he declined to say whether New Delhi would back Mr Tosovsky.

A senior Brazilian presidential official said Brazil sought reform but was not backing any particular candidate.

Forex volatility puts future of yen carry trade in doubt

Forex volatility puts future of yen carry trade in doubt
in Tokyo

Published: August 22 2007 03:00 | Last updated: August 22 2007 03:00

The recent sharp moves in the foreign exchange markets have raised the question of whether the yen carry trade is doomed to extinction.

Many market participants believe the volatility in the forex markets will make yen carry trades too risky for investors in the future. "These are trades that everyone knew were going to come unstuck and they just did," says Mark Cutis, chief investment officer at Shinsei Bank.

The yen carry trade, whereby investors borrow in yen at low interest rates and invest in higher-yielding assets in other currencies, was popular with hedge funds and Japanese retail currency traders as long as market volatility - and therefore foreign exchange risk - was low.

But amid uncertainty about the broader impact of the subprime problem, volatility in the foreign exchange markets has surged, leading many investors to unwind their positions.

"The hedge funds have panicked," says a managing partner at a large US hedge fund. Funds are shying away from risk because "our mentality today is you have no idea what is going to happen in the world".

Whenever the yen has appreciated against the dollar or sterling in the past, Japanese retail currency traders have mitigated the movement by moving in to sell the currency. For example, the last time the yen strengthened rather quickly - during the Chinese market wobbles in March - Japanese currency margin traders happily came back to sell more yen, helping to keep a lid on the currency's rise.

However, this time the unwinding of the carry trade is occurring with such force that individuals, who borrow about 10 times their own funds to trade, have been forced to unwind as they face automatic stop-loss limits, says Tohru Sasaki, chief foreign exchange strategist at JP Morgan in Tokyo.

Many investors were forced to cut their losses once the yen hit Y115 to the US dollar, says Tsuyoshi Ueda, an official at gaitame.com, which provides services to individual forex traders.

Mr Sasaki estimates that of the Y7,000bn ($61bn, €45bn, £31bn) in yen short positions through margin trading, day traders bought back yen to the tune of Y3,800bn in just one week.

Some believe the strengthening of the yen this time will be temporary and that once stock markets stabilise, Japanese individual currency traders will come back to sell.

Individual traders have been calling in to ask whether it is a good time to start selling yen again, says Naoto Minatogawa, analyst at Himawari Shoken, a leading supplier of services to individual forex traders.

Others disagree. They say that, with the Federal Reserve expected to lower rates and the Bank of Japan clamouring to raise rates, the interest rate differential between Japan and the US will shrink.

One big question is what the large number of Japanese investors who have bought investment trusts or uridashi bonds denominated in dollars and other high-yield currencies will do.

So far, these investors, who have generally invested surplus funds, have stood firm. But if US interest rates start to fall sharply and the dollar plunges - as some believe will happen - even those investors could choose to redeem.

The impact of those retail investors repatriating their funds is likely to be much larger than that which has been seen so far.

As one banker says: "Japan is the provider of the world's liquidity. So the unwinding of that will have a big impact."

Japan watches much of the turmoil from sidelines

Japan's credit markets have not been immune to the turmoil that is affecting markets overseas, even though Japanese banks have limited exposure to the US subprime problem, write Michiyo Nakamoto and David Turner.

However, the impact of the credit blockage in the US and Europe has been relatively contained, because Japan does not face the kind of liquidity crisis that has been seen in the US and Europe. Short-term lending rates in the yen have risen, spurred by a search by borrowers for alternatives to raising finance in dollars.

On Monday, the three-month yen lending rate in the London interbank market (Libor) climbed 10 basis points to a 12-year high of 1.0175 per cent.

In the Tokyo interbank market, rates have also risen, though not by as much.

Commenting on the rise in short-term rates for yen borrowing, Akihiko Yokoyama, bond strategist at JPMorgan in Tokyo, said: "If the Bank of Japan allows this situation for a long time, then interest rate costs will deliver a body blow to (Japanese) financial institutions, because most of them are net cash borrowers."

Burma increases price of rationed fuel

Burma increases price of rationed fuel
in Bangkok

Published: August 15 2007 16:31 | Last updated: August 15 2007 16:31

Burma’s ruling military junta unexpectedly raised the price of rationed fuel by as much as 500 per cent on Wednesday, a move likely to drive up the price of food and other essentials and further squeeze the country’s already struggling poor.

The secretive regime gave no warning of the increase or any public explanation for the move. But analysts said the decision to slash fuel subsidies probably reflected a cash crunch as the regime pours resources into showcase projects such as the construction of a new capital city.

“I think they are hard up because of this new capital,” said a Rangoon-based analyst, who asked not to be identified. “I have a feeling they don’t have any money.”

The price of state-rationed gasoline rose from $1.16 to $1.94 an imperial gallon, while the diesel price rose from $1.16 to $2.33, hefty mark-ups in a country where a typical teacher’s salary is just $30 (€22, £15) a month.

The price of compressed natural gas, which the government has promoted as fuel for commercial vehicles, was raised 500 per cent – from 39 cents for a 65-litre canister to $1.94 a canister.

Residents of Rangoon, Burma’s former capital and largest city, said many buses and taxis, caught off guard by the steep increase, remained off the road, while others raised their fares.

The price of rice and other commodities is expected to surge as a result of higher transport costs, further fuelling inflation that independent estimates already suggest is running at 60-80 per cent this year.

“It’s really going to hurt poor people,” said one analyst. “It’s going to be terrible.” Besides running cars, diesel is also used by many families and shopkeepers to run small power generators in the face of blackouts.

In February, a handful of irate Rangoon residents staged a rare and dangerous protest against the repressive military government, blaming it for soaring inflation and long power cuts.

The protest was rare in that it challenged the regime’s basic competence rather than its moral legitimacy. Some participants were detained for questioning the following month but were freed after being given stiff warnings against similar protests in the future.

State-subsidised fuel plays an important role in the survival strategies of many ostensibly “middle-class” families in Burma’s deeply ailing economy. Car owners are allotted two gallons of subsidised fuel each day. But many immediately sell their rations for higher prices on the black market, using profits to supplement paltry government salaries or pensions. “Some people just live on this,” said the analyst.

The rise in the price of rationed fuel is expected to result in higher black market prices for fuel as well.

Burma last raised prices for rationed fuel in October 2005, increasing prices nearly nine-fold.

The Financial Times Limited 2007

First, food. Then toys. And now...clothes

First, food. Then toys. And now...clothes
NZ boy burnt after China-made pyjamas caught fire
By Clarissa Oon, CHINA CORRESPONDENT


UP IN FLAMES: Three-year-old New Zealand Jack Livingstone was burnt last month when his made-in-China pyjamas burst into flames as he sat by a gas fire. -- PHOTO: WAIKATO TIMES

BEIJING - A YOUNG boy in New Zealand suffered burns and underwent a skin graft after his made-in-China pyjamas caught fire early last month.
Three-year-old Jack Livingstone's parents had bought the pyjamas because the label said 'low fire danger', according to his father Mike.

The Warehouse, the largest retailer in the country, withdrew the pyjamas from its shelves over the weekend after a second boy suffered burns.

Besides investigating these two cases, the NZ authorities are also looking into allegations that some made-in-China clothing contains dangerous levels of a chemical.

Scientists in NZ found formaldehyde concentrations up to 900 times above the safety limit in clothing for children and adults.

Formaldehyde is sometimes applied to garments to prevent mildew, but too much can cause problems from skin rashes to cancer.

Made-in-China clothes are the latest Chinese exports to come under scrutiny following concerns over the safety of other exports.

Just last week, United States toy giant Mattel issued its second global recall of 18.2 million toys made and assembled in China because of their excessive use of lead paint.

But the NZ probe is the first time China's important textiles and clothing industry has been targeted.

This sector produced more than 13 per cent of the country's exports in the first half of this year.

China has responded to the recent safety concerns by tightening regulations, but has also hit back at the West.

One official called the furore over Chinese exports a 'new trend in trade protectionism'.

Responding to NZ's moves, a spokesman for China's textile trade chamber of commerce told The Straits Times yesterday the screening of textile imports is an 'accepted international practice'.

The chamber will 'act accordingly' once the results of the NZ probe are out, the spokesman said.

He reiterated official statements that most of China's exports are safe, but appealed to more developed countries to 'raise suggestions' to 'help Chinese companies lift the quality of its products'.

The Consumers Association of Singapore (Case) says it has received no feedback on this issue. Said Case executive director Seah Seng Choon: 'We are certainly concerned and will write to the New Zealand Consumers Association to get more details before deciding the appropriate course of action.'

Cool nudes

Cool nudes


PHOTO: AFP

Nearly 600 volunteers from all over Europe posed naked for a US photographer on Switzerland's melting Aletsch glacier on Saturday.
The photo shoot on the protected Unesco World Heritage site was organised by environmental group Greenpeace to raise awareness about global warming.

Greenpeace says the human body is as vulnerable as glaciers like the Aletsch, which is shrinking by more than 100m a year.

The shoot was conducted in temperatures of around 10 deg Celsius by photographer Spencer Tunick, who has staged mass nude photo shoots in cities around the world. Tunick calls them 'living sculptures' or 'body landscapes'.

Fourth university coming up

Fourth university coming up
Three existing ones too large to be expanded; new one to have own identity
By Peh Shing Huei


SINGAPORE will have a fourth public-funded university, and may not stop at four.
Confirming recent speculation that there will be another university, Prime Minister Lee Hsien Loong yesterday revealed that the Government could 'open more than one route' to tertiary education.

The new university will have its own character and unique strengths, he said, adding that the three public universities are already large and should not be expanded further.

Minister of State for Education Lui Tuck Yew will chair a committee to study how to expand the university sector, with former deputy prime minister Tony Tan acting as adviser.

A decision will be made within a year, Mr Lee said.

This was among a number of education changes he announced, all pointing in the same direction: more options and more pathways to success through a first-rate education system.

MORE ALTERNATIVES
The Government could 'open more than one route' to tertiary education. Lui Tuck Yew will chair a committee to study how to expand the university sector, with Tony Tan acting as adviser.

Other changes in education
Selected secondary schools will offer a regional studies programme for Singapore students to learn Malay and about countries in the region. About 100 scholarships will be given a year with the scheme.


There will be more incentives to encourage the study of Malay by non-Malays and Chinese by non-Chinese. These include two bonus points for junior college admission.
... more
The new university comes at a time of rising demand for tertiary education, and as more polytechnic graduates want to pursue degrees.

Already, 15 per cent of poly graduates move on to the National University of Singapore, Nanyang Technological University and the Singapore Management University, and many more go overseas.

The current situation has led to some unhappiness.

Even though the universities increased the number of places, there was some fretting over admissions earlier this year because there were more applicants as well.

Mr Lee recounted what MacPherson MP Matthias Yao had told him about two constituents, a couple whose two children did well in polytechnic and went to Australia for their degrees and remained there.

'So two old folks alone at home, feeling bereft, empty nest,' said Mr Lee.

Today, 23 per cent of every batch of children entering Primary 1 makes it to the three universities.

The aim is to raise that proportion to 30 per cent by 2015, and that will mean 2,400 more places each year.

Rear-Admiral (NS) Lui said after the rally that there will be a lot of work ahead for his committee to come up with a plan for the new university to meet the aspirations of young people here, especially the 'polytechnic upgraders'.

'We have a great opportunity now to integrate it with the polytechnics, so that it comes through almost as a through-train programme,' he said.

In his speech, Mr Lee said the Government's aim is to give every child a top-rate education and the Education Ministry had worked hard to emphasise quality at all neighbourhood schools.

Principals and teachers had more freedom to experiment, more resources were going to schools with good ideas, and there was more help available for needy students.

He shared examples of successful experiments to 'Teach Less, Learn More' - a change of approach he first described in his inaugural National Day Rally in 2004.

Lessons have become more interesting, children are participating more actively, and he had seen this for himself in visits to Jurong Secondary and Mayflower Primary schools.

It meant that children from less-privileged backgrounds have more opportunities to level up.

Explaining why this was important, he cited a study here which found that wages go up by 14 per cent for every extra year a person spent in school.

I know wer u r. Ur fone told me

I know wer u r. Ur fone told me
New S'pore-designed software allows a cellphone user to track another's location just by sending an SMS
By Cheryl Tan & Jocelyn Lee


MOBILE phones are turning into tracking devices.
A local businessman has come up with software that allows a person to nail down another's location just by sending an SMS message to him.

Two new cellphones from Nokia - the 6110 Navigator and E90 Communicator - can also pinpoint a person's location on the phones' maps using the Global Positioning System (GPS).

The Nokia GPS tracking function works only when both parties exchange their position coordinates.

This means both sides can track each other only if both parties agree to it.

Nokia Singapore's general manager Christopher Carr said the function is intended to give consumers an opportunity to 'share where they are' and users can choose to turn the function off.

'It's up to the individual on how they want to adopt the service,' he added.

But the software, devised by local company JOPCA Solutions, is non-consensual.

All it takes is just one SMS and about a minute to locate somebody down to a radius of 50m through his mobile phone without the person realising it.

The catch? The person's phone must have the software installed.

At the moment, the software is compatible only with Nokia N-series and 6000 series phones and to those with an M1 line.

The phone does not give any indication that it has received or sent any SMS messages revealing the phone owner's location. It also does not show that it has been rigged.

This way, users of the phone remain oblivious that they are being tracked.

Lawyer Adrian Tan of Drew and Napier said tracking someone without their knowledge is not against the law.

But he said that installing the software without the knowledge of the owner is illegal and is 'equivalent to hacking into a computer' which contravenes the Computer Misuse Act.

'It's just like a spyware for mobile phones,' Mr Tan added.

Lawyer Sunil Sudheesan of KhattarWong Partnership raised a possible scenario where a father buys a phone for his son and does not tell him that the tracking software has been installed.

'In such a case, it would be legal as the father would be the owner of the phone,' he said.

The software costs between $600 and $900 to install, depending on the phone model.

But even the steep pricing is not enough to deter customers from asking for the software.

JOPCA business developer Michael Ng, 42, said he has had more than 50 customers since the product was launched in May.

The bulk of his customers - almost 80 per cent - are parents 'who want to know where their kids are'.

These parents are willing to spend for that 'peace of mind', said Mr Ng.

The rest are suspicious spouses and delivery company bosses who need to know where their employees are.

Mr Ng said an Indonesian Chinese businessman brought three new Nokia N70 phones, meant as gifts for his teenage children, for him to install the software.

The father, who works overseas, wants to know where his children are when he is away.

'I think that's reasonable,' said Mr Ng, who does informal interviews with his clients to find out their reasons for wanting the software.

He draws the line at installing the software for individuals to spy on their partners, choosing to decline even an additional offer of $1,000 by one desperate client.

A professional in his mid-30s, the client called late at night demanding that the software be installed in his spouse's phone immediately, Mr Ng said.

The look of desperation and nervousness in his client's eyes when they met that same night prompted Mr Ng to turn him away.

He later advised his client to consult a private investigator but was scolded for being a busybody.

'I don't want to do such business. I don't want to be responsible for ruining a marriage,' he said.

New citizens get national ceremony

New citizens get national ceremony
By Melissa Sim
ON THE stage in the hall of Parliament House stood nine people from five different countries - India, the United States, China, the Philippines and Myanmar.
Their voices resounded along with 146 others as they recited the national pledge.

Last night was a big day for them - they became Singaporeans.

This was the first National Citizenship Ceremony and also the first step towards creating Singapore's own 'Citizenship Day' - an idea that Deputy Prime Minister Wong Kan Seng raised in Parliament earlier this month.

Yesterday, DPM Wong told the 400 people - new citizens and their Singaporean friends - that 'Citizenship Day' would be for 'all Singaporeans to come together to celebrate their citizenship and reaffirm their common identity as Singaporeans'.

'By inducting our new citizens in the company of other Singaporeans, we are celebrating our commitment to a shared destiny and our mutual sense of belonging,' he added.

The new citizens add to the economic, cultural and social milieu of Singapore's society, he said.

'In choosing to make Singapore your home, you have decided with both your heart and feet. You have shown confidence in Singapore to continue to do well. It also reflects your desire and commitment to contribute to our shared future.'

Becoming a citizen never was such a grand affair.

Before 1998, new citizens would simply collect their citizenship certificates from what was then known as the Singapore Immigration and Registration.

After 1998, ceremonies were organised by Community Development Councils at the district level, with more than 300 new citizens at each event.

But in April this year, these ceremonies were held at the constituency level to foster better engagement with the community.

At last night's event, the new citizens had a chance to mingle with ministers and Members of Parliament, who turned up to mark the ceremony's importance.

The national anthem was sung, a choir sang national songs and the ceremony ended in typical Singaporean fashion - a feast.

Over the next five years, Singapore can expect to add about 200,000 permanent residents and 40,000 citizens to its fold.

Many of the citizens at last night's ceremony were the first in their families to settle in Singapore and hoped to bring their loved ones over to join them.

Others had families here and viewed Singapore as home.

Housewife Gemma Garcia, 42, from the Philippines, has been here for almost 10 years.

'I'm married to a Singaporean. This is where my family is,' said the mother of three.

On the other hand, MrJeremy Lin, 25, who works in an insurance company, is the first Singaporean in his family and is trying to convince his parents to come over from Sichuan, China.

Mr Lin came to Singapore when he was 17. 'I did most of my growing up here,' he said.

He was accompanied by his Singaporean friend, MrThomas Thyng, 24, a student.

Said Mr Thyng: 'It was a really touching ceremony. It reminded us that we're all Singaporeans.'

CPF changes: Better returns, longer wait for minimum sum

CPF changes: Better returns, longer wait for minimum sum
PM Lee announces policy changes to tackle issues of income divide and ageing population
By Lydia Lim, Senior Political Correspondent
SINGAPOREANS will enjoy a higher return on their CPF savings, but will also have to delay drawing down on their minimum sum as more live longer.
This stretching out of the CPF social safety net is part of a massive strategy that Prime Minister Lee Hsien Loong mapped out last night to tackle the issues presented by a growing income divide and an ageing population.

He also announced plans for a fourth university, bigger housing grants for poorer households and a new labour law to help more people work past the retirement age of 62.

The policy changes are designed to provide greatest support to the lower- and middle-income groups, and create more opportunities for them to move up.

Making his fourth National Day Rally speech, Mr Lee exuded confidence and was upbeat about Singapore's growth prospects.

He was thus moving to 'secure our home base', he told an audience of 3,000 at the National University of Singapore Cultural Centre that included, for the first time, opposition MPs.

VIDEO

Boosting home ownership assets
(5:57)

CPF changes for a healthy nest egg
(4:31)
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CLICK TO READ THE FULL SPEECH
The ambition, he said, was to give every citizen a stake in the country's success and create a sense of security and hope.

Urging stronger social cohesion, he said the country had to guard against the pulls of race and religion, rich versus poor, or winners and losers.

'We must never let this happen. If we can stay together, then we make Singapore a home base where we all belong,' he said.

Key to this is finding solutions to two major challenges arising from the ageing population, many of whom also tended to be from the lower-income: employment for older workers and ensuring enough savings for old age.

Mr Lee unveiled a three-pronged plan to stretch CPF savings so people will have enough for old age, even as life spans go up.

Explaining why the CPF system had to be adjusted and brought up to date, he noted that when the pension fund was set up in 1955, the average life expectancy was 61. Now, it is 80.

The first change covers the CPF interest rate. It will go up by one percentage point for the first $60,000 that each member has in his various CPF accounts.

For funds in the Ordinary Account, only the first $20,000 will attract a return of 3.5 per cent a year, up from 2.5 per cent now. CPF members can still use this first $60,000 for housing and medical costs, but not withdraw any of it to invest on their own.

More than half the CPF members who make regular contributions will, as a result, receive higher returns on their entire balances.

Second, the age at which CPF members can start drawing down from their Minimum Sum will go up progressively from 2012, from the current age of 62, until it reaches 65 in 2018.

Those affected will receive a one-off 'deferment' bonus.

This will be done in tandem with a new law which will require employers to offer jobs to workers who have reached the retirement age of 62, but want to keep working.

Both the draw-down age and re-employment age will first be raised to 65, and later to 67.

Lower-income, older workers aged 55 and above will receive an added incentive to stay employed - a higher Workfare Income Supplement of up to 20 per cent of their monthly wage, if it is $1,000 or less.

The third change to the CPF system will be to make some form of annuities compulsory, so members receive a monthly payout for as long as they live. But it will only be for CPF members aged 50 or younger.

'If we make these changes in good time, then we can assure Singaporeans of peace of mind in your golden years.'

Manpower Minister Ng Eng Hen will announce more details next month.

On education, the second limb in the Government's plan to tackle the income gap, Mr Lee announced the setting up of a fourth publicly-funded university to meet rising demand.

On housing, Mr Lee announced changes to help lower-income first-time buyers as well as cash-strapped older folk, and new upgrading and estate renewal programmes.

He said Singapore is able to address these difficult challenges because of capable leaders and dedicated workers.

'A strong Singapore team, each giving his best for the nation, doing things together that none of us could have achieved on our own. This is our greatest asset, this is the secret of our success,' he said.

Lenders sour on sub-prime market

Lenders sour on sub-prime market
Gone are the days when a new immigrant could get easy credit to buy a home
By Bhagyashree Garekar, US Correspondent


WASHINGTON - WHEN Ms Genevieve Florendo decided to buy a house this year, she had no idea it could be done in a snap.
It turned out that she could. As recently as this year, lenders were still giddily offering mortgages to sub-prime buyers like Ms Florendo, although the sector's fallout has tightened the faucets.

Ms Florendo, 32, who arrived from the Philippines to work in the United States as a nurse less than five years ago, had always assumed she would need to pay a sizeable down payment to own a home. As a new immigrant, she was almost sure she could not afford it.

A friend referred her to a realtor and a lender who assessed her creditworthiness, her income and bank balance. And before a month had passed, she was the proud owner of a US$275,000 (S$423,000) townhouse in Glen Burnie, Maryland.

'All I paid was US$7,000 towards the closing fee, the expenses towards securing the title and other formalities.'

She felt lucky, she added. 'Some of my friends are buying houses now, and they are getting loans at 7 per cent to 7.5 per cent. Just a few months ago, when I signed the deal, the rates were lower. I pay a fixed rate of 6.65 per cent.'

Ms Florendo is what is called a sub-prime borrower - the term used for a borrower who does not qualify for the lowest rates at which banks extend loans.

Usually, sub-prime rates are applied because the borrower has a patchy credit history and so is charged more for the greater risk he represents to the lender. Or the borrower may simply lack the extensive credit and employment histories that get the best rates and terms.

Was she nervous, given the unsavoury sub-prime label?

'Well, I got my accountant brother in Singapore to vet the terms and conditions in the loan contract, and I felt more confident after that,' she said.

By some estimates, sub-prime lending has accounted for as much as half of the past decade's rise in the US home ownership rate from 65 per cent to 69 per cent.

The rates for a sub-prime loan can go as high as 10 per cent, said Mr Kenny Sylvestor, who is with a mortgage company based in Rockville, Maryland.

Lately, sub-prime borrowers have spelled bad news for investors as the housing market slumped and loan defaults soared. That has left a sour taste in the mouths of investors in the US and as far away as Germany and Japan.

Chances are bright that Ms Florendo, with her steady income of US$7,000 a month and a spouse who works part-time, will turn out to be among the four out of five sub-prime borrowers who do not default on payments.

On the other hand, among the sub-prime borrowers are also fraudsters who meant to make the most of deals that required no upfront payments or even documentation; and the ignorant and the poorly educated who became victims of unscrupulous loan sharks with little grasp of the payments involved. Hundreds of thousands of them have lost their homes.

In some cases, borrowers could opt for variable-rate loans that offered low starter rates for the first two years and then adjusted for the remaining 28 years to a rate that was often three percentage points higher than what a prime customer normally paid.

Also in the sub-prime category are people buying vacation homes or investment properties.

At first, delinquencies were low. But that was mainly because home prices were rising so much that borrowers who fell behind could easily refinance their loans.

Over the last six months, and dramatically in the last three months, lending re-

gulations have been tightened and it is difficult to take out a loan without putting up a 20 per cent down payment.

'It is not easy any more,' said Mr Sylvestor, who has been a mortgage broker for 12 years. About 10 per cent of his clients are sub-prime, he said.

US, Europe bourses soar after Fed cuts key interest rate

US, Europe bourses soar after Fed cuts key interest rate
By Goh Eng Yeow, Markets Correspondent
EUROPEAN and United States share markets rocketed last night after the US central bank made a surprise cut in a key interest rate in a bid to calm jittery investors.
European bourses reversed their losses and shot up - London was 4 per cent ahead at one point - while Wall Street added as much as 320 points within minutes of opening before shedding much of the gains in early trading.

At press time, the Dow Jones Industrial Average was up 119.09 points, or 0.93 per cent, at 12,964.87.

All eyes will now be on Asian bourses when trading resumes on Monday, and investors are expecting a similar rebound if Wall Street's gains are sustained till the close.

The New York Times called the Fed's move a 'significant change'', noting that it left its benchmark short-term interest rates unchanged just a few weeks ago, citing continued concern about inflation.

The paper said the move signals that policy makers may be prepared to cut interest rates more quickly than earlier thought.

The move came after what had already been an extraordinary day on Asian bourses, particularly in Singapore.

The Straits Times Index (STI) had plunged by 190 points after lunch, but staged an astonishing U-turn to claw most of it back late in the day to close just 21.45 points down at 3,130.71.

But the STI's heroics were trumped by the US Fed when it announced at 8.30pm (Singapore time) that it had cut its discount rate by 0.5 percentage points, from 6.25 per cent to 5.75 per cent.

The discount rate is the rate the Fed charges to make direct loans to US banks. It means banks can get their hands on cash at a cheaper rate, easing fears over the availability of credit.

The Fed justified the unscheduled cut because 'financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth'.

The response was instant and stunning. European markets reversed out of the red, while Wall Street went north once it opened an hour later.

It also gave shell-shocked traders here a welcome lift for the weekend. Remisier Alan Tan said: 'This is the best news I have heard this week.'

Stock markets across most of Asia had earlier staged comebacks of varying strengths in late trading to erase one of the worst single-day losses in 20 years.

Hong Kong staged an STI-style rebound, with the Hang Seng Index ending down 285.26 points after diving 1,285 points after lunch.

Dealers have blamed hedge funds - investment funds with billions of dollars under their control - for the Asian roller-coaster.

'Hedge funds are having a field day,' said the stockbroking director of a Singapore brokerage, as traders stared at a sea of red ink from Mumbai to Tokyo.

Singapore had opened slightly higher after a late overnight bounce on Wall Street. But optimism soon evaporated when Tokyo came under heavy selling pressure after the yen rose sharply against the US dollar and other regional currencies.

This forced funds with massive yen loans to dump stocks and bonds as they stampeded out of Asia.

When Tokyo's Nikkei-225 Index closed down 874.81 points, or 5.4 per cent, at 3pm (Singapore time), all other regional bourses were trading at their lowest ebb.

Unconfirmed talk in Hong Kong of buying shares in giant China-listed firms by mainland Chinese funds gave the Hong Kong market a lift, and enabled the Hang Seng to recover almost 1,000 points in the last hour of trading.

That Hong Kong recovery helped the STI recover 168 points in two hours.

Currency turmoil in the spotlight as yen gains strength

Currency turmoil in the spotlight as yen gains strength
Falling currencies got some respite yesterday as yen took a breather from its steep rise
By Erica Tay, Economics Correspondent
MOST of the attention in the past week of eye-popping market chaos has centred on worrisome home loan defaults in the United States known as sub-prime mortgages.
However, another less visible - but potentially more serious - problem is battering markets in a second wave of grim news.

Massive loans by big investors taken out in the Japanese currency to fund purchases around the world are unravelling as jittery investors cash out of risky assets.

The reason yen loans were so attractive is that Japanese interest rates and the yen were relatively low - but all that is changing fast.

The dumping by nervous investors of high-yielding assets funded by these cheap yen loans led to massive turbulence in currency markets over the past week.

The Japanese unit surged against the euro, sterling and US dollar, as well as Asian currencies. The South Korean won, Indonesian rupiah and Philippine peso were among the regional currencies that took the biggest hit.

RELATED LINKS
Rising Yen
High-interest units such as the Australian and New Zealand dollars dropped the most - with the Aussie losing 17 per cent against the yen and the kiwi slumping 24 per cent in less than a month.

Late yesterday, tumbling currencies saw some respite as the Japanese unit took a breather from its steep rise.

The yen retreated from its morning peaks of 112 yen per US dollar, 86 yen per Australian dollar and S$1.38 per 100 yen.

By late last night, the greenback bought about 114 yen, Australian dollar 88 yen and the Singdollar traded at S$1.36 per 100 yen.

The Singdollar has lost around 9 per cent against the yen in the last three weeks.

However, market watchers warn that the yen's rise could resume next Monday, as currency speculators ride on the unravelling of so-called 'carry trades' and put further upward pressure on the Japanese unit.

'Clearly, when the carry trades out there have been unwound, there would also be people riding on the momentum and selling any high-yielding currencies,' said Fortis Bank strategist Joseph Tan.

On the other hand, he added, the yen's turnaround late yesterday was 'miraculous', and it points to an opposite force - possible intervention by Asian central banks to support their own currencies.

The Reserve Bank of Australia and the New Zealand central bank were also observed intervening in the currency market, he added.

The yen carry trade, or the practice of borrowing in the low-interest Japanese currency and investing in assets elsewhere, has been a key source of liquidity for global markets.

Its unwinding will lead to a further reduction in cash available for investments, at a time when banks are pulling back on lending, as risk aversion increases. If the trend continues, there is a risk of financial market turmoil spilling over to the real economy, say economists.

'The problem is no longer limited to the sub-prime market or the credit market - it has become a liquidity issue. We are very close to the line where financial market trouble tips over into trouble for the real economy,' United Overseas Bank economist Jimmy Koh said.

'If this bout of risk aversion blows over soon enough, and the market consolidates soon enough, it won't be an issue for the economy,' said Fortis Bank's Mr Tan. 'The problem is if it slumps into a bear market, then there is the risk of a recession.'

Gift of clean water - in a 15-cent sachet

Gift of clean water - in a 15-cent sachet
Pur has found its way to 40 countries, making 700 million litres drinkable
By Arti Mulchand


Pur powder is added to contaminated water and stirred for five minutes. A 4gm sachet should be used for 10 litres of water. -- ST PHOTO: ALAN LIM

View more photos

IN SOME Third World countries where clean water is not a given, life now comes in a packet the size of a tea-bag.
Each sachet - at just 10 US cents (15 Singapore cents) - can disinfect 10 litres of dirty water in 30 minutes, which means a lot fewer cases of diarrhoea and disease.

To date, 70 million packets of Pur water-purifying powder, a product of Procter & Gamble, have been donated or sold to 40 countries or the non-government agencies operating there.

So 700 million litres of water have been made drinkable in places like Sri Lanka, Indonesia, Malawi, Haiti and Pakistan, under the company's Children's Safe Drinking Water programme.

Programme director Gregory Allgood, an industrial toxicologist, explained that Pur works like a dirt magnet. The powder combines a 'flocculant', which separates particles and organisms from water, and a disinfectant that kills bacteria and viruses.

Tests by the United States Centres for Disease Control and Prevention have found that water treated by Pur cuts the number of diarrhoea cases by up to half, said the Ohio-based Dr Allgood, who was in Singapore this week for talks with World Vision on a tie-up to work together in the region.

The 'Pur-fect' transformation


In just 30 minutes, dirty, murky water is turned crystal clear and drinkable with the help of Pur water-purifying powder.
... more
Pur, which had already won the coveted Stockholm Industry Water Award two years ago, garnered another prize this week: It beat more than 7,000 other project ideas to win US$2 million in the American Express' The Members Project contest.

Unicef, the United Nations' body for children's welfare, will decide how the money is spent to bring the benefits to even more children.

Pur has come a long way. Launched less than four years ago, it was to have been a commercial product that people could buy, like shampoo.

The company sank US$20 million from 2000 into research and development, and into building infrastructure to distribute Pur in four test markets - the Philippines, Pakistan, Guatemala and Morocco.

But only three million packets were sold. It just was not reaching the people who most needed it, and not enough infrastructure was there to bring it to them.

Dr Allgood said that when the company tried building that infrastructure, it dug itself into a deep financial hole.

But because he did not want the project to die, he suggested that the company continue making Pur, but on a not-for-profit basis.

It was the first time Procter & Gamble had done something like this in its 169-year history.

But there was good reason to do it: About 4,000 children were dying each day because they had no access to safe drinking water, he said.

Dr Allgood got the go-ahead to take the not-for -profit track just a month before the Dec 26 tsunami in 2004 - and 13 million sachets ended up in stricken areas, providing life-sustaining water.

Since then, Pur has helped prevent some 29 million days of diarrhoea and saved 3,850 lives in places where people have no choice but to use filthy water from rivers, ponds and streams.

Dr Allgood said: 'It would be fair to say that the project has been a humanitarian success, even if it was a commercial failure. But while you can do well as a company, you can also do good.''

He has often swallowed more than he has been prepared to, in the name of showing the power of Pur.

Once, in Malawi, a dead dog was lying on the bank of a stream where water for a demonstration was being collected.

He still drank it.

But what he sees on the road convinces him that this is work that needs to be done.

In a Kenyan village recently, the people were drinking 'liquid mud' - water collected from the same streams that cattle were defecating in. The need for clean water was so desperate that the water purified for a woman as part of a demonstration of Pur was promptly stolen.

He said: 'The woman got down on her hands and knees and begged for more sachets so her family could have clean water. It was pretty life-changing. I knew then that I wanted to dedicate my career to providing these people with help.'

He added that it was great to have saved lives, but children were still dying every day, 'so we have a lot of work to do to scale this up''.

Key currencies fall as investors sell assets funded by yen loans

Key currencies fall as investors sell assets funded by yen loans
High-yielding NZ$ bears brunt of sell-off as investors cash out in flight from risk
By Erica Tay, Economics Correspondent
THE United States sub-prime crisis that has wreaked havoc on stock markets has spread to currencies, hitting key units like the sterling and leaving experts wondering where it will end.
In three weeks, the sterling, the euro as well as the New Zealand, Australian and US dollars have plunged against the yen, posting drops of between 6 per cent and 14 per cent. The high-yielding NZ dollar took the biggest hit.

The US dollar fell below the key psychological level of 117 yen yesterday while the euro slid past 160 yen and the NZ dollar went under 85 yen.

'It is madness,' said Fortis Bank strategist Joseph Tan, on the turbulence in the foreign exchange market yesterday afternoon.

A flight from risk has caused investors to step up their exodus from investments in Europe, the United States, Australia and New Zealand, which were funded by ultra-cheap yen loans - a popular practice known as the 'yen carry trade'.

The exit from assets denominated in these higher-interest currencies and ploughed back into yen - known as an unwinding - caused the currencies to dive against the Japanese unit, said analysts.

RELATED LINKS
ON A LOSING STREAK
'The kiwi, sterling and euro have broken through their support levels. What you are seeing is a massive unwinding of the carry trade,' added Mr Tan.

A trigger for yesterday's rush to unwind carry trades, said analysts, was news that yet more billion-dollar funds have stopped investors' redemptions. This has led investors of other funds to fear that if they do not cash out, they will be caught out as well.

And yesterday was the last day for investors of certain hedge funds - those requiring 45 days' notice for redemptions - to ask for their money back if they want to cash out at the end of this quarter, reported the Financial Times.

'Fear has spread from funds invested in sub-prime assets to the credit markets, to just about anything,' said United Overseas Bank economist Jimmy Koh.

If the unwinding picks up momentum, it would be a double whammy for asset markets, said economists.

Over the past week, central banks have been pumping liquidity into markets as risk aversion arising from the sub-prime debacle caused banks to be reluctant to lend.

Economists fear that if the carry trade unwinding snowballs and pushes up the Japanese currency further, yen-denominated loans will become expensive and more investors will cash out. This, in turn, will lead to a deepening crunch in liquidity.

'The unwinding is substantial but it's not the worst yet,' said Mr Nizam Idris, UBS director of foreign exchange research and strategy. 'In the last three weeks, it was institutional investors unwinding their trades. Now we're seeing the second leg of unwinding, by Japanese retail investors, your 'mums and pops'.'

Mr Tan said that while carry trades are still largely profitable, fear is now ruling behaviour: 'At this point in time, nobody in his right mind would get in.'

As for how much further the high-yielding currencies could fall, 'it's a multi-billion-dollar question', said a Singapore-based currency strategist with a US bank.

'Seriously, I have no idea how far this thing would go. Our forecasts don't work anymore, because all the technicals have been broken on the downside,' he said.

'Suffice to say, the past three weeks is probably the tip of the iceberg.'

Hello, holidays, goodbye, bags

Hello, holidays, goodbye, bags
An average of 10 passengers per flight in Europe lose bags: Study


PHOTO: AP

LONDON - IT'S the summer of lost luggage for travellers in Europe.
Such is the magnitude of the problem that travellers have been advised by the Association of European Airlines (AEA), which includes the major national carriers, to avoid checking in bags altogether and to take carry-on luggage instead.

The association released figures last month showing that an average of 10 passengers per flight lost bags between April and June.

British Airways (BA) was cited as the worst among Europe's major airlines, and is on track to lose a record 1.3 million bags this year.

After a luggage 'mountain' of some 22,000 lost bags piled up in London recently, BA was forced to fly 10 baggage-only jumbo jets to the US to reunite passengers with their belongings, said Ms Laura Goodes, a spokesman.

'Our baggage performance has not been as good as we would have liked and we fully apologise to those customers who have been affected by delayed baggage in the past few months,' Ms Goodes said.

Lost in transit
An average of 10 passengers per flight in Europe lost bags between April and June, said the Association of European Airlines (AEA).


British Airways was the worst among Europe's major airlines with respect to lost luggage, the AEA said. The carrier mislaid 28 bags for every 1,000 passengers during that period.
... more
A chronic shortage of bag handlers and aged infrastructure at London's Heathrow Airport, underscored by a faulty conveyor belt between Terminals One and Four, are said to be exacerbating the problem for British Airways.

Figures from AEA show that since March last year, BA has been either the worst or the second-worst airline in Europe for looking after luggage.

In the latest figures released last month - for the second quarter of the year - BA mislaid 28 bags for every 1,000 passengers. Around 300,000 bags failed to turn up on carousels - almost double the level of competitors such as Air France and Lufthansa.

Those two airlines both carried three million more passengers than BA during the period, but lost only 16 bags for every 1,000 passengers.

The AEA revealed that there were 11 major problems with baggage systems at Heathrow during the second quarter.

Similar problems are bedeviling airports elsewhere in the continent.

At Rome's biggest airport Fiumicino, thousands of suitcases have been building up since late last month - the peak of the tourist season. Conveyer belts have malfunctioned and handling companies have lacked the workers needed to keep pace with demand.

Last week, a spokesman for Aeroporti di Roma, the company that manages Fiumicino, said the luggage service had 'almost returned to normal', but that 800 unclaimed suitcases may be auctioned off.

Growing numbers of passengers, both on major airlines and on smaller regional carriers, are compounding airports' woes.

Heathrow was designed to handle 45 million passengers annually, but now handles more than 68 million.

Neither is the problem confined to Europe.

In the United States, reports of lost luggage soared by about 26 per cent in June compared with a year earlier, according to US Department of Transportation figures.

They climbed from 6.3 per 1,000 passengers in June last year, to 7.9 per 1,000 passengers this year.

But it is probably not that surprising given that the 20 airlines reporting data to the department flew a record 3.69 million flights between January and June.

In Britain, hundreds of unclaimed suitcases are put under the hammer by airlines every week, with scores of iPods, mobile phones and digital cameras removed and auctioned off separately, according to a report in the Daily Telegraph.

Record numbers of bags are expected to be sold in the coming months, said one auctioneer, for prices of between £5 (S$15) and £50.

A spokesman for BA said proceeds in the 'tens of thousands of pounds' every year were donated to charity from bag sales.

Let the rich go forth and multiply

Let the rich go forth and multiply
By Clive Crook

Published: August 8 2007 19:01 | Last updated: August 8 2007 19:01

In Guns, Germs, and Steel, Jared Diamond made a surprising yet instantly plausible argument about long-term development. The west grew rich and the rest did not because of geography. Thanks to where they were, Europe and its North American offshoots had plants and animals that were easy to domesticate, a low burden of disease, and natural resources that supported industrialisation. The Industrial Revolution began in England and spread to continental Europe and the United States because of luck.

A new book, to be published next month, argues that Mr Diamond got it all wrong. Gregory Clark’s A Farewell to Alms: A Brief Economic History of the World* is fully as absorbing, as memorable and as well written as Mr Diamond’s remarkable bestseller. It deserves to be as widely read.

Mr Clark argues that what made the difference was not geography or biology, or for that matter institutions such as property rights and democracy, but culture. The rich grew rich because they evolved attitudes that supported economic modernisation; the poor stayed poor because they failed to do the same. Mr Clark, an economic historian at the University of California, Davis, has gathered a wealth of intriguing evidence and argument in support of this claim, and does not flinch from drawing some disturbing inferences.

Until the early 19th century, he writes, the world was caught in a Malthusian trap (after the English economist Thomas Malthus, who argued that population growth would starve the world of food and other resources). Slow advances in knowledge failed to drive incomes up; they spurred growth in population instead. Most people in 18th century England endured a standard of living roughly equivalent to that of the stone age. Abundance was self-cancelling: so far as economic laws were concerned, humans and animals were much alike.

Starting in England, two things happened to let the west escape this trap. Economic efficiency began to rise faster and fertility declined. As a result, for the first time, accelerating improvements in productivity fed through to living standards. Instead of an endless supply of impoverished people, growth caused an amazing improvement in incomes per person.

Why did it begin in England? Certainly not because the country lacked “bad-tempered hippos and zebras”. And the reason was “not coal, not colonies, not the Protestant Reformation, not the Enlightenment”. It was the combination of social stability stretching back more than 500 years and the relative fecundity of the materially successful. When Mr Clark talks of “evolving” a social environment conducive to modernisation, he means it literally. In England, the rich went forth and multiplied – much more so than ordinary folk. This caused a cascade of downward mobility, as the children of the rich spilled over into lower social stations. In this way, bourgeois values were embedded into the wider culture. The cultural conditions for defying Malthus were taking shape elsewhere too. But the process had moved farthest in England, so England was first.

Mr Clark rejects “abrupt change” theories of the Industrial Revolution, which look for external shocks of one kind or another. Incomes surged only after 1800, but productivity had moved on to a gradual upward arc long before. For most, material conditions in England may have been no better in 1800 than in 1200 – but society was nonetheless transformed. The intervening centuries had laid the intellectual and cultural foundations for the modern economy.

This view has some gloomy implications. The poorest countries are still caught in the Malthusian trap, Mr Clark argues, and in that world, virtue and vice in public policy can seem reversed.

The consequence of measures to improve life expectancy is to drive down incomes – the converse of England’s earlier advantage in having appalling standards of hygiene, which kept lifespans short and incomes comparatively high. (According to Malthusian logic, if you improve people’s ability to subsist on low incomes, the subsistence income falls – as it has in Africa, Mr Clark points out.) Moreover, if the key to modernisation is a workforce with bourgeois values, and if we do not know how to spread bourgeois values, there is nothing we can do to raise incomes in poor countries.

The book’s tone is by no means as bleak as you might suppose (or maybe as it should be): Mr Clark writes with disarming wit. But is he right?

Much as I recommend this brilliant book, I cannot say I am convinced. One problem is India, about which Mr Clark appears to know a lot. The book explains in some detail why it failed to industrialise – mainly, Mr Clark says, because Indian workers were culturally unprepared to work with modern technology.

But if these backward attitudes were, as he believes, bred in the bone, how does one account for India’s growth since it liberalised in the early 1990s? Growth miracles such as that confound cultural pessimism. They suggest that the right incentives can summon the right attitudes rather quickly. The striking success of economic migrants once they move from poor countries to rich points the same way. I believe that culture is much more malleable, for good or ill, than Mr Clark allows.

But any book that is as bold, as fascinating, as conscientiously argued and as politically incorrect as this one demands to be read.