May

31

The local Singapore business paper had an article breaking down performance of local equities in various sectors. There is triple-digit performance in the construction sector, 40 to 50 percent performance in the finance sector and healthy rises across the board.

Swanky new nightspots are mushrooming and expensive cars are seen in greater numbers. Property sells for record prices with each new development. Recently there was a story of professional speculators who purchased condos to get on their boards in order to urge residents to agree to flip the entire building to a developer, essentially merger arbitrage in real estate.

From Ryan Carlson:

Yesterday, I just returned from a week in Singapore and am wildly bullish on it as well. So bullish that I'm planning on moving there in about six months and this trip was to help lay the groundwork for it.

Apparently, I'm one of many. The current cover of Time's Asia edition is on Singapore and the lead story is Singapore Soars.

In regards to construction stocks, besides riding along for the sharp upturn in local real estate values, I think it's a great way to play region growth as many have projects in China, Vietnam, Indonesia, and other countries where I wouldn't/couldn't invest directly.

The mention of expensive cars really is a great wealth indicator judging on how expensive it is to have a car in Singapore. I certainly won't have one once I move. An easy estimate is that whatever a car costs in the US, double it for there.

I strongly believe Singapore is the most dynamic place to live in the world today, and if I had to choose what investment I would buy and hold for the distant future, Singaporean equities, real estate, and the currency would be my choice.

Geographically, it's at the hub of three of the four most populous countries in the world (Indonesia is the 4th), which makes it an excellent place to watch developments in those other countries. No other place in the region can even remotely offer the quality of life or cleanliness and I firmly believe that wealthy citizens of India, China, Vietnam, Indonesia, etc, will all aspire to live in Singapore's cleaner, safer and more orderly society. If not full-time, then perhaps a pied-a-terre as a hedge against trouble in their homeland.

Regardless, the most important thing that will find a home in Singapore is capital. Private banking in the country has been a particular highlight as bank secrecy laws are in some instances stricter than in Switzerland. As the saying goes, "when it comes to large amounts of money, it's advisable to trust no one." And I certainly wouldn't trust the banks in other regional countries to hold a large amount of my money.

To help with inviting capital, Singapore offers favorable low tax rates, doesn't tax capital gains, and also provides numerous incentive programs including one aimed at attracting derivatives traders. I agree with the method of taxing consumption rather than income, which is generally how the system allows for a lower direct tax.

A reason why so many policies are correct in my view is that almost every Singaporean I've ever met was educated at a university overseas in the UK, US, Canada, or Australia. In turn, they take back home the best policies but also get a firsthand view of damaging policies elsewhere to avoid.

Those civil servants who enact and draw up policies in Singapore are some of the highest paid in the world. Although there is understandably some backlash to government officials paid so highly, I like how it retains those who would be bid away to the private sector. It's hard to take care of others if you can't take care of yourself first and the policy discourages corruption.

Quite often the mentality of Singapore is summed up simply with the word 'kaisu' which translates from Chinese into 'afraid to lose.' The small island has to compete globally in almost every facet and most notably with Malaysia in terms of many regional competitions. Because of the mindset and no shortage of competitors, Singapore will always have to continue the pace of development to drive the economy. Those in Singapore have built a tremendous global city through their ingenuity, and I hope that I can make my contribution by moving there myself soon.

Nigel Davies asks: 

Why is Singapore considered to be a good place to live? Is it really freedom, or is there an unspoken 'biggy-like' respect for property rights? Here are some sample laws in Singapore:

  1. Bungee jumping is illegal.
  2. The sale of gum is prohibited.
  3. Homosexuals are not allowed to live in the country.
  4. Pornography is illegal.
  5. As it is considered pornographic, you may not walk around your home nude.
  6. Failure to flush a public toilet after use may result in very hefty fines.
  7. It is considered an offense to enter the country with cigarettes.
  8. Cigarettes are illegal at all public places.
  9. It is illegal to come within 50 meters of a pedestrian crossing marker on any street.
  10. If you are convicted of littering three times, you will have to clean the streets on Sundays with a bib on saying, "I am a litterer."

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